Random Discounted Expected Utility


This paper introduces the random discounted expected utility (RDEU) model, which we have developed as a means to deal with heterogeneous risk and time preferences. The RDEU model provides an explicit linkage between preference and choice heterogeneity. We prove that it has solid comparative statics and also demonstrate its computational convenience. Finally, we illustrate the empirical implementation of this model using two distinct experimental datasets.

under submission

Previously circulated as “Random Models for the Joint Treatment of Risk and Time Preferences”.

Ángelo Gutiérrez‑Daza
Ángelo Gutiérrez‑Daza
Research Economist

Directorate of Economic Studies - Banco de México