Consider the following three utility streams across periods t= 0, 1, 2 a = (3,0,0) b...

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Consider the following three utility streams across periods t= 0, 1, 2 a = (3,0,0) b = (0,4, 0) c = (0,0, 5) Answer the following questions (For some of the questions, you may not be able to completely solve for B or 8). 1. Suppose you are an exponential discounter, and that at time 0 you are indifferent be- tween a and b. What does this tell you about 8? 2. Suppose you are a hyperbolic discounter, and that at time 0 you are indifferent between a and b. What does this tell you about 3 and 8? 3. Suppose you are a hyperbolic discounter, and that at time 0 you are indifferent between b and c. What does this tell you about 3 and 8? 4. Suppose you are a hyperbolic discounter, and that at time 0 you are indifferent between all the three utility streams. What does this tell you about B and 8? Consider the following three utility streams across periods t= 0, 1, 2 a = (3,0,0) b = (0,4, 0) c = (0,0, 5) Answer the following questions (For some of the questions, you may not be able to completely solve for B or 8). 1. Suppose you are an exponential discounter, and that at time 0 you are indifferent be- tween a and b. What does this tell you about 8? 2. Suppose you are a hyperbolic discounter, and that at time 0 you are indifferent between a and b. What does this tell you about 3 and 8? 3. Suppose you are a hyperbolic discounter, and that at time 0 you are indifferent between b and c. What does this tell you about 3 and 8? 4. Suppose you are a hyperbolic discounter, and that at time 0 you are indifferent between all the three utility streams. What does this tell you about B and 8?

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1 At a time of 0 indifference between a and b for a hyperbolic discounter indicates 3 4 Thi... View the full answer