Abstract
AbstractThis article examines the effects of ambiguity aversion on intertemporal decisions when there is ambiguity about a future state. Compared to the existing literature, we allow for a three‐way separation between intertemporal substitution, risk aversion, and ambiguity aversion. Holding risk preferences, beliefs, and time preferences fixed, we explore how a change in ambiguity aversion increases the strength of the current willingness to pay. We apply our results to saving, self‐protection, and self‐insurance problems.
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