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Paper: ETH-RC-12-001

Title: Life-Cycle Preferences Revisited

Authors: Antoine Bommier*


Abstract:

An axiomatic construction for lifecycle preferences accounting for the finiteness and the randomness of life duration is provided. We emphasise the role of intertemporal correlation aversion and explain why multiplication preferences provide an interesting alternative to additive preferences, allowing to separate risk aversion from intertemporal elasticity of substitution. Implications regarding the shape of the optimal consumption profiles are discussed.


Keywords: Intertemporal choice, Life-cycle models, Multivariate risk aversion, Uncertain lifetime

Manuscript status: Accepted

Reference: Accepted

JEL codes: D91
PACS numbers:



Local copy of the paper: ETH-RC-12-001.pdf


Submission date: 10-1-2012


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