Publication: Is intertemporal choice theory testable?
Is intertemporal choice theory testable?
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Kübler, F. (2004). Is intertemporal choice theory testable? Journal of Mathematical Economics, 40(1–2), 177–189. https://doi.org/10.1016/S0304-4068(03)00091-0
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Kreps–Porteus preferences constitute a widely used alternative to time separability. We showin this paper that with these preferences utility maximization does not impose any observable restrictions on a household’s savings decisions or on choices in good markets over time. The additional assumption of a weakly separable aggregator is needed to ensure that the assumption of utility maximization restricts intertemporal choices. Under this assumption, choices in spot marketsare characterized by a strong axiom of revealed preferences (SS
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Kübler, F. (2004). Is intertemporal choice theory testable? Journal of Mathematical Economics, 40(1–2), 177–189. https://doi.org/10.1016/S0304-4068(03)00091-0