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Conditional Utility Independence and its Application to Time Streams

Abstract

The evaluation of time streams is traditionally performed by some form of discounting and even the more sophisticated approaches require some form of independence assumptions between consequences in adjacent periods. Frequently a decision maker's preferences for consequences in a given period will depend on the particular outcome in the previous and/or following period. This paper gives a simple functional form which enables such preferences to be explicitly included in a utility function for time streams

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