Exotic Preferences for Macroeconomists
journal contributionposted on 01.08.2008 by David K. Backus, Bryan R Routledge, Stanley E. Zin
Any type of content formally published in an academic journal, usually following a peer-review process.
We provide a user’s guide to “exotic” preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risk- sensitive and robust control, “hyperbolic” discounting, and preferences over sets (“tempta- tions”). We apply each to a number of classic problems in macroeconomics and finance, including consumption and saving, portfolio choice, asset pricing, and Pareto optimal allo- cations.