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.
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Bibliographic InfoArticle provided by Springer in its journal Social Choice and Welfare.
Volume (Year): 38 (2012)
Issue (Month): 4 (April)
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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..
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- Christian Schubert, 2012. "Opportunity and Preference Learning," Papers on Economics and Evolution 2012-08, Philipps University Marburg, Department of Geography.
- Christian Schubert & Martin Binder, 2014. "Reconciling Normative and Behavioral Economics: An Application of the “Naturalistic Approach” to the Adaptation Problem," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 234(2-3), pages 350-365, April.
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