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Exotic Preferences for Macroeconomists

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journal contribution
posted on 01.08.2008, 00:00 by David K. Backus, Bryan R Routledge, Stanley E. Zin
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.


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