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Modelling change in individual characteristics: An axiomatic framework

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  • Dietrich, Franz

Abstract

Economic models describe individuals by underlying characteristics, such as the degree to which they like music, have sympathy, want success, need recognition, etc. In reality, such characteristics change through experiences: taste for Mozart changes through attending concerts, sympathy through meeting people, etc. Models typically ignore change, partly because it is unclear how to incorporate it. I develop a general axiomatic framework for defining, analysing and comparing rival models of change. Seemingly basic postulates on modelling change have strong implications, like irrelevance of the order in which someone has his experiences and ‘linearity’ of change. This paper is a step towards placing the modelling of change on axiomatic grounds and enabling non-arbitrary incorporation of change into economic models.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 76 (2012)
Issue (Month): 2 ()
Pages: 471-494

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Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:471-494

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: Change; Taste; Sympathy; Altruism; Rational choice; Axiomatic foundations; Dynamic (in)consistency; Externalities;

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References

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  1. Dufwenberg, M. & Kirchsteiger, G., 1998. "A Theory of Sequential Reciprocity," Discussion Paper 1998-37, Tilburg University, Center for Economic Research.
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  5. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
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  8. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  9. Hammond, Peter J, 1976. "Changing Tastes and Coherent Dynamic Choice," Review of Economic Studies, Wiley Blackwell, vol. 43(1), pages 159-73, February.
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Citations

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Cited by:
  1. Franz Dietrich & Christian List, 2014. "Reason-Based Rationalization," STICERD - Theoretical Economics Paper Series /2014/565, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  2. Franz Dietrich & Christian List, 2013. "Reason-Based Rationalization," Levine's Working Paper Archive 786969000000000841, David K. Levine.
  3. Franz Dietrich & Christian List, 2011. "A model of non-informational preference change," Journal of Theoretical Politics, , vol. 23(2), pages 145-164, April.

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