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Author:Kocherlakota, Narayana R. 

Speech
Opening Remarks / Narayana Kocherlakota, President ... Marshall, Minnesota ... May 5, 2015

Speech , Paper 133

Journal Article
Looking for evidence of time-inconsistent preferences in asset market data.

This study argues that strong evidence contradicting the traditional assumption of time-consistent preferences is not available. The study builds and analyzes the implications of a deterministic general equilibrium model and compares them to data from the U.S. asset market. The model implies that (1) because of dynamic arbitrage, the prices of retradable assets cannot reveal whether preferences are time-inconsistent; but (2) the prices of commitment assets, investments which must be held for their lifetime, can. These prices will be higher than the present values of their future payoffs only ...
Quarterly Review , Volume 25 , Issue Sum , Pages 13-24

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