Modelling change in individual characteristics: an axiomatic framework
AbstractEconomic models describe individuals in terms of underlying characteristics, such as taste for some good, sympathy level for another player, time discount rate, risk attitude, and so on. In real life, such characteristics change through experiences: taste for Mozart changes through listening to it, sympathy for another player through observing his moves, and so on. Models typically ignore change, not just for simplicity but also because it is unclear how to incorporate change. I introduce a general axiomatic framework for defining, analysing and comparing rival models of change. I show that seemingly basic postulates on modelling change together have strong implications, like irrelevance of the order in which someone has his experiences and `linearity'' of change. This is a step towards placing the modelling of change on solid axiomatic grounds and enabling non-arbitrary incorporation of change into economic models.
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Bibliographic InfoPaper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 045.
Date of creation: 2008
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Other versions of this item:
- Dietrich, Franz, 2012. "Modelling change in individual characteristics: An axiomatic framework," Games and Economic Behavior, Elsevier, vol. 76(2), pages 471-494.
- C0 - Mathematical and Quantitative Methods - - General
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- D0 - Microeconomics - - General
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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