Events and Meetings of Italian Statistical Society, Statistics and Demography: the Legacy of Corrado Gini

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Time Dominance for not too impatient decision makers
Claudio Zoli

Last modified: 2015-09-05

Abstract


We investigate intertemporal dominance conditions for comparisons of finite unidimensional streams of outcomes in discrete time when policy makers exhibit limited impatience in the evaluations. We derive criteria for unanimous net present value comparisons for classes of discount functions representing temporal preferences where the weight attached in the current evaluation, between the outcomes of two adjacent periods is bounded. Our results provide parametric dominance conditions that make explicit the policy maker's trade-off between current and future periods. These conditions can be summarized by a single cutoff point that can be interpreted as the maximal decrease in the discount function, that guarantees unanimous dominance for the class of intertemporal preferences considered.


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