How should the distant future be discounted when discount rates are uncertain?

The so-called "Weitzman-Gollier puzzle" is the fact that two seemingly symmetric and equally plausible ways of dealing with uncertain future discount rates appear to give diametrically opposed results. The puzzle is resolved when agents optimize their consumption plans. The long run discount rate declines over time toward its lowest possible value.

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Year of publication:	2010
Authors:	Gollier, Christian ; Weitzman, Martin L.
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 107.2010, 3, p. 350-353
Publisher:	Elsevier
Keywords:	Discount rate Term structure Climate change Cost-benefit analysis

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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