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Keyword: dynamic inconsistency;
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Daniel Gottlieb and Xingtan Zhang
We study contracts between naive present-biased consumers and risk-neutral firms. We show that the welfare loss from present bias vanishes as the contracting horizon grows. This is true both when bargaining power is on t...Read more...
1 March 2021
This paper presents an analysis of general time preferences in the canonical Rubinstein (1982) model of bilateral alternating-offers bargaining. I derive a simple sufficient structure for optimal punishments and ther...Read more...
15 October 2015
Erzo G J Luttmer and Thomas Mariotti
We consider an exchange economy with time-inconsistent consumers whose preferences are additively separable. When these consumers trade in a sequence of markets, their time-inconsistency may introduce a non-convexity tha...Read more...