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We examine the investment decision problem of a group whose members have heterogeneous time preferences. In particular … exponential discounting for their collective investment decisions even if all agents discount exponentially.We also exhibit … conditions that lead the representative agent to have a rate of impatience that decreases with GDP per capita. …
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The utility maximization problem of "ratchet investors" who do not tolerate any decline in their consumption rate is solved explicitly for all felicity functions in a Markovian framework which includes Brownian motion and Poisson processes as special cases. The optimal consumption plan turns out...
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