INTERPERSONAL ALLOCATION CONTINUOUS WITH INTERTEMPORAL ALLOCATION - BINDING COMMITMENTS, PLEDGES, AND BEQUESTS

Gifts and bequests trouble economic theory. A solution is to deal simi larly with distributions for consumption among (a) the current person, (b) future self-persons who are legally and physically the same indiv idual who is allocating, and (c) other individuals at present and in t he future. Instead of a one-dimensional maximizing entity, or even the two-dimensional individual who allocates intertemporally, this model envisages a three-dimensional surface, with an interpersonal ''distanc e'' dimension replacing the concept of altruism. A key assumption as i n Strotzian intertemporal allocations, is that the discount between th e current conscious ''person'' and future ''self-persons'' within the same individual is greater than the discount between other equal-lengt h forward periods within the same individual. Applying a conventional present-value framework to evaluate utility as seen at various decisio n-making moments, then makes sense of the phenomena tender discussion.