Abstract
We consider an exchange economy with time-inconsistent consumers whose preferences are additively separable. If consumers have identical discount factors, then allocations that are Pareto efficient at the initial date are also renegotiation-proof. In an economy with a sequence of markets, competitive equilibria are Pareto efficient in this sense, and for generic endowments, only if preferences are locally homothetic.
Original language | English (US) |
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Pages (from-to) | 493-506 |
Number of pages | 14 |
Journal | Journal of Economic Theory |
Volume | 132 |
Issue number | 1 |
DOIs | |
State | Published - Jan 2007 |
Keywords
- Competitive equilibrium
- Pareto efficiency
- Time-inconsistent preferences