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dc.contributor.authorAase, Knut K.
dc.date.accessioned2020-11-05T12:26:36Z
dc.date.available2020-11-05T12:26:36Z
dc.date.issued2020-10-30
dc.identifier.issn1500-4066
dc.identifier.urihttps://hdl.handle.net/11250/2686569
dc.description.abstractWe address how recursive utility affects important results in the theory of economics of uncertainty and time, as compared to the standard model, where the focus is on dynamic models in discrete time. Several puzzles associated with the standard theory are less puzzling with recursive utility, even if this type of preference representation seems close to the standard one at first sight. An inconsistency with the axioms behind the standard, separable and additive expected utility representation is pointed out and extended to also be relevant for recursive utility. The basic difference from the standard model is that recursive utility allows a form of separation of consumption substitution from risk aversion. This also means that the timing of resolution of uncertainty matters. In dynamic models, however, this turns out to be a rather crucial step.en_US
dc.language.isoengen_US
dc.publisherFORen_US
dc.relation.ispartofseriesDiscussion paper;13/20
dc.subjectRecursive utilityen_US
dc.subjectaxiomsen_US
dc.subjectscale invarianceen_US
dc.subjectutility gradientsen_US
dc.subjectthe equity premium puzzleen_US
dc.subjectprecautionary savingsen_US
dc.titleElements of economics of uncertainty and time with recursive utilityen_US
dc.typeWorking paperen_US
dc.source.pagenumber38en_US


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