Discounting and Divergence of Opinion
Napp, Clotilde; Marin, Jean-Michel; Jouini, Elyès (2010), Discounting and Divergence of Opinion, Journal of Economic Theory, 145, 2, p. 830-859. http://dx.doi.org/10.1016/j.jet.2010.01.002
Type
Article accepté pour publication ou publiéExternal document link
http://halshs.archives-ouvertes.fr/halshs-00176636/fr/Date
2010Journal name
Journal of Economic TheoryVolume
145Number
2Publisher
Elsevier
Pages
830-859
Publication identifier
Metadata
Show full item recordAbstract (EN)
The objective of this paper is to adopt a general equilibrium model and determine the socially efficient discount factor and discount rate when there are heterogeneous anticipations about the future of the economy as well as heterogeneous time preference rates. Among others we tackle the following questions. Is the socially efficient discount factor an arithmetic average of the individual subjectively anticipated discount factors as in the certainty equivalent approach of Weitzman (1998, 2001) ? As a sort of additional risk or uncertainty, can beliefs dispersion lead to lower discount rates ? Is it socially efficient, when diversity of opinion is taken into account, to reduce the discount rate per year for more distant horizons ? More generally, what is then the shape of the yield curve ?Subjects / Keywords
Heterogeneous Anticipations; Equilibrium models; Beliefs; Risk free rate; Discount rateRelated items
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