Exotic Preferences for Macroeconomists

57 Pages Posted: 13 Oct 2008

See all articles by David K. Backus

David K. Backus

NYU Stern School of Business (deceased); National Bureau of Economic Research (NBER)

Bryan Routledge

Carnegie Mellon University - David A. Tepper School of Business

Stanley E. Zin

Carnegie Mellon University; National Bureau of Economic Research (NBER)

Multiple version iconThere are 4 versions of this paper

Date Written: September 2004

Abstract

We provide a userâ¬"s guide to â¬Sexoticâ¬? preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risk sensitive and robust control, â¬Shyperbolicâ¬? discounting, and preferences over sets (â¬Stemptationsâ¬?). 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.

Keywords: time preference, risk, uncertainty, ambiguity, robust control, temptation, dynamic consistency, hyperbolic discounting, precautionary saving, equity premium, risk sharing

Suggested Citation

Backus, David K. and Routledge, Bryan R. and Zin, Stanley E., Exotic Preferences for Macroeconomists (September 2004). NYU Working Paper No. 2451/26134, Available at SSRN: https://ssrn.com/abstract=1282563

David K. Backus (Contact Author)

NYU Stern School of Business (deceased)

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Bryan R. Routledge

Carnegie Mellon University - David A. Tepper School of Business ( email )

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(412) 268-7064 (Fax)

Stanley E. Zin

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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