Theoretical Economics, Volume 2, Number 1 (March 2007)

Theoretical Economics 2 (2007), 71–113


Delay aversion

Jean-Pierre Benoît, Efe A. Ok

Abstract


We address the following question: When can one person properly be said to be more delay averse than another? In reply, several (nested) comparison methods are developed. These methods yield a theory of delay aversion which parallels that of risk aversion. The applied strength of this theory is demonstrated in a variety of dynamic economic settings, including the classical optimal growth and tree cutting problems, repeated games, and bargaining. Both time-consistent and time-inconsistent scenarios are considered.

Keywords: Delay aversion, impatience, consumption smoothing, time consistency

JEL classification: D11, D90

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