57 Pages Posted: 7 Nov 2008
Date Written: June 2004
We provide a userâ¬"s guide to â¬Sexoticâ¬? preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risk sensitive and robust control, â¬Shyperbolicâ¬? discounting, and preferences over sets (â¬Stemptationsâ¬?). We apply each to a number of classic problems in macroeconomics and finance, including consumption and saving, portfolio choice, asset pricing, and Pareto optimal allocations.
Keywords: time preference, risk, uncertainty, ambiguity, robust control, temptation, dynamic consistency, hyperbolic discounting, precautionary saving, equity premium, risk sharing
Suggested Citation: Suggested Citation
Backus, David K. and Routledge, Bryan and Zin, Stanley E., Exotic Preferences for Macroeconomists (June 2004). NYU Working Paper No. S-MF-04-13. Available at SSRN: https://ssrn.com/abstract=1296383