Exotic Preferences for Macroeconomists

David K. Backus, Bryan R. Routledge, Stanley E. Zin
2004 NBER macroeconomics annual  
We provide a user's guide to "exotic" preferences: nonlinear time aggregators, departures from expected utility, preferences over time with known and unknown probabilities, risksensitive and robust control, "hyperbolic" discounting, and preferences over sets ("temptations"). We apply each to a number of classic problems in macroeconomics and finance, including consumption and saving, portfolio choice, asset pricing, and Pareto optimal allocations. JEL Classification Codes: D81, D91, E1, G12.
doi:10.1086/ma.19.3585343 fatcat:6sr2wsrwqjfpjmabdpgd2porqa