How the market responds to dynamically inconsistent preferences
AbstractThis paper responds to the 'soft paternalist' argument that the findings of behavioural economics make traditional objections to paternalism incoherent. We show that there is a normatively significant sense in which, even if individuals lack coherent preferences, competitive markets are efficient in providing them with opportunities to get what they want. Extending earlier analysis by Sugden, we model a multi-period 'storage economy' and explore the implications of dynamically inconsistent preferences. We show that, despite apparent conflicts of judgement between an individualÃ¢â¬â¢s 'selves', competitive markets provide maximal opportunity, and that they do so by facilitating voluntary exchanges between selves.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 38 (2012)
Issue (Month): 4 (April)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00355/index.htm
Other versions of this item:
- Ben McQuillin & Robert Sugden, 2011. "How the market responds to dynamically inconsistent preferences," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 11-04, School of Economics, University of East Anglia, Norwich, UK..
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
- Cass R. Sunstein & Richard H. Thaler, 2003.
"Libertarian paternalism is not an oxymoron,"
Conference Series ; [Proceedings],
Federal Reserve Bank of Boston, vol. 48(Jun).
- Douglas Bernheim & Antonio Rangel, 2007.
"Beyond Revealed Preference Choice Theoretic Foundations for Behavioral Welfare Economics,"
07-031, Stanford Institute for Economic Policy Research.
- B. Douglas Bernheim & Antonio Rangel, 2008. "Beyond Revealed Preference: Choice Theoretic Foundations for Behavioral Welfare Economics," NBER Working Papers 13737, National Bureau of Economic Research, Inc.
- Sugden, Robert, 2010. "Opportunity As Mutual Advantage," Economics and Philosophy, Cambridge University Press, vol. 26(01), pages 47-68, March.
- Robert Sugden, 2007. "The value of opportunities over time when preferences are unstable," Social Choice and Welfare, Springer, vol. 29(4), pages 665-682, December.
- Peter J. Hammond, 1999.
"Equal Rights to Trade and Mediate,"
99019, Stanford University, Department of Economics.
- Christian Schubert, 2012. "Opportunity and Preference Learning," Papers on Economics and Evolution 2012-08, Max Planck Institute of Economics, Evolutionary Economics Group.
- Robert Sugden, 2011.
"The behavioural economist and the social planner: to whom should behavioural welfare economics be addressed?,"
Papers on Economics and Evolution
2011-21, Max Planck Institute of Economics, Evolutionary Economics Group.
- Robert Sugden, 2012. "The behavioural economist and the social planner: To whom should behavioural welfare economics be addressed?," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 12-05, School of Economics, University of East Anglia, Norwich, UK..
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.