Conjoint Measurement of Time Preference and Utility.

by Dean T. Jamison

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An application of the theory of measurement to a decision problem involving consequences staggered in time, under the assumption of no uncertainty. Each choice specifies a commodity vector that the individual will have available to him at each point in time. Savage's axiom system is reinterpreted to separate the effect of time preference from that of utility. The axioms place restrictions on a preference relation postulated to exist on the set of choices available. From these axioms a basic representation theorem is proven which shows the existence of functions of time intervals and commodity vectors such that one decision is preferred to another if and only if its present utility (defined in terms of the two functions) is greater. The theory developed here is related in various ways to other theories of intertemporal choice. 27 pp. Refs. (KB

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