Golden Eggs and Hyperbolic Discounting

  title={Golden Eggs and Hyperbolic Discounting},
  author={David I. Laibson},
  journal={Quarterly Journal of Economics},
  • David I. Laibson
  • Published 1 May 1997
  • Economics, Business
  • Quarterly Journal of Economics
Hyperbolic discount functions induce dynamically inconsistent preferences, implying a motive for consumers to constrain their own future choices. This paper analyzes the decisions of a hyperbolic consumer who has access to an imperfect commitment technology: an illiquid asset whose sale must be initiated one period before the sale proceeds are received. The model predicts that consumption tracks income, and the model explains why consumers have asset-specific marginal propensities to consume… 

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