Pareto criterion and long-term perspective criterion under myopic discounting
Under myopic discounting, which encompasses the famous psychological and economics model, hyperbolic discounting preferences, this paper shows that efficiency by the Pareto criterion is a sufficient condition for efficiency by the long-term perspective criterion. This result provides additional just...
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| Main Authors: | , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
2019
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/90015 http://hdl.handle.net/10220/49376 https://econpapers.repec.org/article/eblecbull/eb-18-00794.htm |
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| Institution: | Nanyang Technological University |
| Language: | English |
| Summary: | Under myopic discounting, which encompasses the famous psychological and economics model, hyperbolic discounting preferences, this paper shows that efficiency by the Pareto criterion is a sufficient condition for efficiency by the long-term perspective criterion. This result provides additional justification for Pareto-improving policies under myopic discounting by showing that such policies improve normative preferences as well. As an application of our result, we provide an example of Laibson's Pareto-improving consumption tax. |
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