On the foundations of intertemporal choice

Abstract

In this paper, we consider intertemporal choice from an axiomatic perspective. By doing so, it is possible to discuss intertemporal choice rules in terms of the properties that characterize them. The long term hope of this approach is to interpret and select intertemporal choice rules that satisfy some axioms describing fairness of efficiency. Concepts of fairness often reduce symmetry requirements on the choice procedures and the axiomatic level is a useful one for considering alternative symmetry conditons. In the long run this approach may yield a more explicit idea of what is meant and what can be meant by the term intertemporal equity. Our purposes in this paper are more modest; they are, first, to establish the structural framework and reinterpret some previous results within this intertemporal choice context and, then, to show that, in a surprisingly strong fashion, the discounting rule fails a test of fairness.

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