Kreps-Porteus Preferences

Kreps-Porteus preferences are a way to model how people make choices over time, especially when they value immediate and future benefits differently. Unlike traditional preferences that treat future and present equally, Kreps-Porteus preferences allow for changing attitudes toward intertemporal trade-offs, such as preferring to spread out consumption or to prioritize immediate over delayed rewards. They are flexible and can capture complex decision-making behaviors, making them useful in economics and finance to understand savings, investment, and consumption choices across different periods.