On the Characterization of Aggregate Dynamic Preferences

ALCALÁ LUIS

Bahia Blanca

Congreso; Reunion Anual de la Union Matematica Argentina; 2016

Universidad Nacional del Sur

This paper develops a model of dynamic decisions made by a finite number of agents who have constant but heterogeneous discount factors. It is shown that the construction of Pareto optimal allocations for the group of agents has an equivalent formulation as a dynamic programming problem for a single decision maker with variational preferences. Such preferences can be represented by a recursive, multiple-priors utility and a Bayesian updating process for such set of priors. Therefore, aggregate preferences are dynamically consistent.