On Monday 2 December 2019, Yonatan Berman is giving a lecture entitled: "Ergodicity as a model of intertemporal decision-making".

Yonatan Berman is fellow at London Mathematical Laboratory and will be a visiting Associate Professor at City University New York (CUNY) and the Stone Center on Socio-Economic Inequality.

His research lies in the intersection of public and labor economics with a focus on quantitative methods. He is mainly interested in the evolution of income and wealth distributions, social mobility and their inter-relationship.

Summary: An important question in economics is how people choose between different payments in the future. The classical normative model predicts that a decision maker discounts a later payment relative to an earlier one by an exponential function of the time between them. Descriptive models use non-exponential functions to fit observed behavioral phenomena, such as preference reversal. Here we propose a model of discounting, consistent with standard axioms of choice, in which decision makers maximize the growth rate of their wealth. Four specifications of the model produce four forms of discounting – no discounting, exponential, hyperbolic, and a hybrid of exponential and hyperbolic – two of which predict preference reversal. Our model requires no assumption of behavioral bias or payment risk.

The talk will be held on Monday 2 December 2019 at 10 o'clock in the MR Conference Room.