New paradoxes in intertemporal choice
Journal Title: Judgment and Decision Making - Year 2011, Vol 6, Issue 2
Abstract
Similar to research on risky choice, the traditional analysis of intertemporal choice takes the view that an individual behaves so as to maximize the discounted sum of all future utilities. The well-known Allais paradox contradicts the fundamental postulates of maximizing the expected value or utility of a risky option. We describe a violation of the law of diminishing marginal utility as well as an intertemporal version of the Allais paradox.
Authors and Affiliations
Li-Lin Rao and Shu Li
Keywords
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