Evolution of Time Preference by Natural Selection: Comment
Robson, Arthur J., and
Balazs Szentes. 2008. "Evolution of Time Preference by Natural Selection: Comment."
American Economic Review,
We reexamine Alan R. Rogers' (1994) analysis of the biological basis of the rate of time preference. Although his basic insight concerning the derivation of the utility function holds up, the functional form he uses does not generate equilibrium evolutionary behavior. Moreover, Rogers relies upon an interior solution for a particular kind of intergenerational transfer. We show such interior solutions need not generally arise. Hence Rogers most striking prediction, namely that the real interest rate should be about 2 percent per annum, does not follow.
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Link to Appendix
Robson, Arthur J. (Simon Fraser U)
Szentes, Balazs (U Chicago)
D11: Consumer Economics: Theory
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving