Related works CR Della vigna and Malmendier(2004, QJE): contract design with time inconsistency(monopoly firm CR Heidhues and Koszegi(2010, AER): credit contract with time inconsistency(competitive firm) CR Basu(2011, AEJ-Micro): individuals join rotational savings and credit associations (roscas)to fund repeated purchases of nondivisible goods without defect even when there is no punishment, roscas serves a commitment device
DellaVigna and Malmendier (2004, QJE): contract design with time inconsistency (monopoly firm) Heidhues and Kőszegi (2010, AER): credit contract with time inconsistency (competitive firm) Basu (2011, AEJ-Micro): individuals join rotational savings and credit associations (roscas) to fund repeated purchases of nondivisible goods without defect even when there is no punishment, roscas serves a commitment device Related Works
genda cR Basic model c& Competitive equilibrium c& Linear contract and term premium RR Discussions CR Conclusion
Basic model Competitive equilibrium Linear contract and term premium Discussions Conclusion Agenda
Basic model
Investment Technology CR Three dates(t=0,1, 2) cR Each agent is endowed with 1 unit of good at date o and consumes at date 1 and 2 CR The good can be stored with O return, or invested in a project at dated with a returner> 1 at date 2, if it is liquidated at date 1, one can get 1
Three dates (t=0,1,2) Each agent is endowed with 1 unit of good at date 0, and consumes at date 1 and 2 The good can be stored with 0 return, or invested in a project at date 0 with a return R > 1 at date 2, if it is liquidated at date 1, one can get 1 Investment Technology
Time Inconsistent Preferences CR Self o's utility is u(c1+u(c2) CR Self 1's utility is u(1+ Bu(c2 CR Self o believes that self 1's utility l(c1)+B(c2) B≤B≤ perfect sophistica tion: B=B complete naivety:B=1
Self 0’s utility is u(c1 ) + u(c2 ) Self 1’s utility is u(c1 ) + βu(c2 ) Self 0 believes that self 1’s utility Time Inconsistent Preferences 1 ˆ complete naivety : ˆ perfect sophistica tion : 1 ˆ ( ) ˆ ( ) 1 2 = = + β β β β β u c βu c