Date of Original Version

9-2004

Type

Book Chapter

Abstract or Description

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 (“tempta- tions”). We apply each to a number of classic problems in macroeconomics and finance, including consumption and saving, portfolio choice, asset pricing, and Pareto optimal allo- cations.

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Published In

NBER Macroeconomics Annual 2004, Mark Gertler and Kenneth Rogoff, editors (, 19, 319-414.