Saving behavior in stationary equilibrium with random discounting

Edi Karni*, Itzhak Zilcha

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We study the implications of random discount rates of future generations for saving behavior and capital holdings in a steady state competitive equilibrium with heterogeneous population. A well-known difficulty in deterministic economies with heterogeneous households is that in steady state only the most patient households hold capital. In this paper we state conditions under which this random discounting is sufficient for households other than the most patient ones to save. We thus provide a simple and natural way of overcoming the aforementioned difficulty.

Original languageEnglish
Pages (from-to)551-564
Number of pages14
JournalEconomic Theory
Issue number3
StatePublished - May 2000


  • Dynamic equilibrium with heterogeneous households
  • Random discounting
  • Saving


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