Past and Future: Backward and Forward Discounting

Debraj Ray, Nikhil Vellodi, Ruqu Wang

    Research output: Contribution to journalArticlepeer-review


    We study a model of time preference in which both current consumption and the memory of past consumption enter "experienced utility"- or the felicity - of an individual. An individual derives overall utility from her own felicity and the anticipated felicities of future selves. These postulates permit an agent to anticipate future regret in current decisions, and generate a set of novel testable implications in line with empirical evidence. The model can be applied to disparate phenomena, including present bias, equilibrium savings behavior, anticipation of regret, and career concerns.

    Original languageEnglish (US)
    Pages (from-to)837-875
    Number of pages39
    JournalJournal of the European Economic Association
    Issue number2
    StatePublished - Apr 1 2024

    ASJC Scopus subject areas

    • General Economics, Econometrics and Finance


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