Abstract:
Current economic theory relies on the idea that people plan their behaviour by maximising some appropriate criterion (their discounted utility). We will show that in most cases this makes no sense: the optimal plan devised at time t=0 turns out not be optimal for t>0, that is, when the time comes to implement it. We introduce a new class of strategies, which are not optimal in any way, but which do not suffer from this defect, and we compute them in the particular case of economic growth with intergenerational equity.
When optimising makes no sense: towards a new criterion for rationality
17.04.2024 14:45 - 16:45
Organiser:
W. Schachermayer, R. I. Bot
Location: