Evaluating time streams of income: Discounting what? (Q2425826)

The authors consider the problem where the consequences of a decision accrue over time, are uncertain an income stream as an element of decision. This work consists of seven sections, the first one containing verbal statement, a short survey of existing approaches and detailed survey of each section content. Section 2 presents an example, showing that different technologies used for problem solving are resulting in different valuations for the same project. Section 3 examines the normative appropriateness of the discounted utility model to evaluate income streams whereas an alternative model that discounts the pre-period certainty equivalents is presented in Section 4. In Section 5 are studied some properties resulting utility of discount payoffs. Section 6 reflects detailed study of indirect utility and Section 7 -- conclusions. List of references includes 15 works.