Collective Dynamic Choice: The Necessity of Time Inconsistency
Matthew O. Jackson
Stanford University - Department of Economics; Santa Fe Institute; Canadian Institute for Advanced Research (CIFAR)
California Institute of Technology - Division of the Humanities and Social Sciences
We study collective decisions by time-discounting individuals choosing a common consumption stream. We show that with any heterogeneity in time preferences, every Pareto efficient and non-dictatorial method of aggregating utility functions must be time-inconsistent. We also show that decisions made via non-dictatorial voting methods are intransitive.
Number of Pages in PDF File: 33
Keywords: Preference Aggregation, Collective Preferences, Time Consistency, Intransitive Preferences, Voting, Cyclic Preferences, Present Bias, Hyperbolic Discounting, Social Welfare Ordering
JEL Classification: D72, D71, D91, D03, D11, E24
Date posted: October 31, 2010 ; Last revised: November 23, 2014
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