Foundations of Intrinsic Habit Formation
AbstractWe provide theoretical foundations for several common (nested) representations of intrinsic linear habit formation. Our axiomatization introduces an intertemporal theory of weaning a decision-maker from her habits using the device of compensation. We clarify differences across specifications of the model, provide measures of habit-forming tendencies, and suggest methods for axiomatizing time-nonseparable preferences. Copyright 2010 The Econometric Society.
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Bibliographic InfoPaper provided by David K. Levine in its series Levine's Working Paper Archive with number 122247000000002062.
Date of creation: 04 Apr 2008
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Other versions of this item:
- Rozen, Kareen, 2008. "Foundations of Intrinsic Habit Formation," Working Papers 40, Yale University, Department of Economics.
- Kareen Rozen, 2008. "Foundations of Intrinsic Habit Formation," Cowles Foundation Discussion Papers 1642, Cowles Foundation for Research in Economics, Yale University.
- Kareen Rozen, 2008. "Foundations of Intrinsic Habit Formation," Cowles Foundation Discussion Papers 1642R, Cowles Foundation for Research in Economics, Yale University, revised Mar 2009.
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D90 - Microeconomics - - Intertemporal Choice - - - General
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