Suppose that an intertemporal decision-maker has preferences over consumption paths {(1,2) R) and assume that the...
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Suppose that an intertemporal decision-maker has preferences over consumption paths {(1,2) R) and assume that the utility from consumption path (1,72) is u(x) + Bu(x2), for some number 0 <3 <1 and some strictly increasing function u: R+ R. (a) Does this preference relation satisfy time-independence? Provide an explanation. (b) Does this preference relation satisfy present-bias? Provide an explanation. Suppose that an intertemporal decision-maker has preferences over consumption paths {(1,2) R) and assume that the utility from consumption path (1,72) is u(x) + Bu(x2), for some number 0 <3 <1 and some strictly increasing function u: R+ R. (a) Does this preference relation satisfy time-independence? Provide an explanation. (b) Does this preference relation satisfy present-bias? Provide an explanation.
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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