Exotic Preferences for Macroeconomists
NYU Stern Working Paper No. EC-04-20
Posted: 12 Sep 2004
Date Written: June 18, 2004
We provide a user's guide to exotic preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risk-sensitive and robust control, hyperbolic discounting, and preferences over sets (temptations). 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
JEL Classification: D81, D91, E1, G12
Suggested Citation: Suggested Citation