Exotic Preferences for Macroeconomists

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 numbe...

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Bibliographic Details
Published in:NBER macroeconomics annual 2004-01, Vol.19, p.319-390
Main Authors: Backus, David K., Routledge, Bryan R., Zin, Stanley E.
Format: Article
Language:English
Subjects:
Ambiguity
Consumption
Discounting
Economic models
Entropy
Expected utility
Macroeconomics
Preferences
Risk aversion
Search services
Studies
Temptation
Utility functions
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Description
Summary: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.
ISSN:0889-3365
1537-2642
DOI:10.1086/ma.19.3585343