Jump to ContentJump to Main Navigation
Pricing the Planet's FutureThe Economics of Discounting in an Uncertain World$
Users without a subscription are not able to see the full content.

Christian Gollier

Print publication date: 2012

Print ISBN-13: 9780691148762

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691148762.001.0001

Show Summary Details
Page of

PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 19 October 2019

Alternative Decision Criteria

Alternative Decision Criteria

Chapter:
(p.168) 11 Alternative Decision Criteria
Source:
Pricing the Planet's Future
Author(s):

Christian Gollier

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691148762.003.0011

This chapter describes a sample of the alternative decision criteria that have features which are normatively attractive. A standard critique made to the discounted expected utility (DEU) model that has been used in this volume is that the concavity of the utility function expresses at the same time the aversion to inequalities and the aversion to risk. Moreover, it does not take into account the possibility of an aversion to ambiguity on probabilities, or the formation of consumption habits. Such issues imply that the DEU model is not very good for explaining, or predicting, actual behaviors under uncertainty. However, as this book aims for normative rather than positive arguments, this chapter focuses not on what people actually do, but instead on determining what they should do.

Keywords:   alternative decision criteria, discounted expected utility, utility function, actual behaviors, recursive expected utility, maxmin ambiguity aversion, smooth ambiguity aversion, intergenerational habit formation

Princeton Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.