Econ Theory DOI 10.1007/s00199-016-1020-1 RESEARCH ARTICLE Temporal dominance and relative patience in intertemporal choice Pavlo Blavatskyy 1 Received: 19 April 2016 / Accepted: 28 November 2016 © Springer-Verlag Berlin Heidelberg 2016 Abstract A stream of intertemporal payoffs X first-order (second-order) temporarily dominates another stream Y if (the area below) the cumulative payoff function of X up till any moment of time is always at least as high as that of Y; or, equivalently, any rank-dependent discounted utility maximizer with a strictly increasing (concave) utility function and a strictly decreasing (convex) discount function prefers X over Y. An individual A is relatively more patient than an individual B if, whenever B is willing to undertake some investment project, A is moreover so; or, equivalently, for any stream of payoffs, A’s present-day equivalent is at least as high as that of B; or, equivalently, A’s discount factor is at least as high as that of B and B’s utility function is “more concave” than that of A. Related concepts of absolute patience and comparative probabilistic patience are briefly discussed. Keywords Intertemporal choice · Time preference · Discounted utility · Temporal dominance · Relative patience · Dynamic inconsistency · Hyperbolic discounting JEL Classification D90 1 Introduction Intertemporal choice involves outcomes that are received at different moments in time. Intertemporal choice arises in many economic situations such as consumption/savings decisions, financial investment, education planning and career choice. In such situ- B Pavlo Blavatskyy p.blavatskyy@montpellier-bs.com 1 Montpellier Research in Management, Montpellier Business School, 2300 Avenue des Moulins, 34185 Montpellier Cedex 4, France 123