Technical Note—On the Evaluation of Intertemporal Lotteries | Zendy

Stephen C. Hora | Zendy; Larry M. Austin | Zendy

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Technical Note—On the Evaluation of Intertemporal Lotteries

Author(s) -

Stephen C. Hora,

Larry M. Austin

Publication year - 1983

Publication title -

operations research

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 3.797

H-Index - 140

eISSN - 1526-5463

pISSN - 0030-364X

DOI - 10.1287/opre.31.4.779

Subject(s) - economics , mathematical economics , computer science , econometrics , microeconomics

We consider the evaluation of intertemporal lotteries using two tools: a single univariate utility function and a set of discount coefficients. If each of the lotteries consists of a single stochastic return to be received in a future period, then these tools are sufficient only if the utility function exhibits constant proportional risk aversion. Further, if the lotteries involve returns in more than one time period, we demonstrate that the tools are sufficient if, and only if, the utility function is linear.

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