Golden Eggs and Hyperbolic Discounting
@article{Laibson1997GoldenEA, title={Golden Eggs and Hyperbolic Discounting}, author={David I. Laibson}, journal={Quarterly Journal of Economics}, year={1997}, volume={112}, pages={443-478} }
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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