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 individualâ€™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 InfoPaper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 11-04.
Date of creation: 01 Feb 2011
Date of revision:
Postal: Helen Chapman, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK
Other versions of this item:
- Ben McQuillin & Robert Sugden, 2012. "How the market responds to dynamically inconsistent preferences," Social Choice and Welfare, Springer, vol. 38(4), pages 617-634, April.
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, 2007. "The value of opportunities over time when preferences are unstable," Social Choice and Welfare, Springer, vol. 29(4), pages 665-682, December.
- Sugden, Robert, 2010. "Opportunity As Mutual Advantage," Economics and Philosophy, Cambridge University Press, vol. 26(01), pages 47-68, March.
- 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, issue Jun.
- Peter J. Hammond, 2003.
"Equal rights to trade and mediate,"
Social Choice and Welfare,
Springer, vol. 21(2), pages 181-193, October.
- 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.
- 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..
- Christian Schubert, 2012. "Opportunity and Preference Learning," Papers on Economics and Evolution 2012-08, Max Planck Institute of Economics, Evolutionary Economics Group.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alasdair Brown).
If references are entirely missing, you can add them using this form.