Time-Stochastic Dominance and iso-elastic discounted utility functions

Antonin Pottier (1)

1 CERNA i3 - Centre d'économie industrielle i3

Dietz and Matei (2015) introduce Time-Stochastic Dominance and apply it to evaluate climate-change mitigation. They compute several preferences classes for which mitigation policies are preferred to business-as-usual. The purpose of the present study is to investigate which standard utility functions (with constant time-discount rate and a constant risk aversion) belong to them. The major contribution is to map preferences classes studied by Dietz and Matei (2015) into the space of time-discount rate and elasticity of marginal utility of consumption, space in which the climate debate has been shaped so far.

Mots clés: time-stochastic dominance; climate change; discounting

Domaines: Economies et finances

Antonin Pottier. Time-Stochastic Dominance and iso-elastic discounted utility functions: a comment on Dietz and Matei (2015). 2015. ⟨hal-01185848⟩