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The Revealed Preference Theory of Changing Tastes

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  • Faruk Gul
  • Wolfgang Pesendorfer

Abstract

We analyse preferences over finite decision problems in order to model decision-makers with "changing tastes". we provide conditions on these preferences that identify the Strotz model of consistent planning. building on an example given by Peleg and Yaari (1973) , we show that for problems with infinitely many choices, Strotz's representation of preferences may not be well defined. For that case, we propose a well-defined approximation which is empirically indistinguishable from the Strotz preference that is being approximated. Copyright 2005, Wiley-Blackwell.

Suggested Citation

  • Faruk Gul & Wolfgang Pesendorfer, 2005. "The Revealed Preference Theory of Changing Tastes," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 429-448.
  • Handle: RePEc:oup:restud:v:72:y:2005:i:2:p:429-448
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2005.00338.x
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    Cited by:

    1. Alexander Groves, 2013. "Identifying What is tempting," Working Papers ECARES 2013-41, ULB -- Universite Libre de Bruxelles.
    2. Startz Richard & Tsang Kwok Ping, 2012. "Nonexponential Discounting: A Direct Test And Perhaps A New Puzzle," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-35, November.
    3. Bishnu, Monisankar & Wang, Min, 2013. "Voting under temptation," Economics Letters, Elsevier, vol. 118(3), pages 419-423.
    4. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    5. Tran, Chung, 2016. "Fiscal policy as a temptation control device: Savings subsidy and social security," Economic Modelling, Elsevier, vol. 55(C), pages 254-268.
    6. João Ferreira & Nicolas Gravel, 2017. "Choice with Time," Working Papers halshs-01577260, HAL.
    7. Piermont, Evan & Takeoka, Norio & Teper, Roee, 2016. "Learning the Krepsian state: Exploration through consumption," Games and Economic Behavior, Elsevier, vol. 100(C), pages 69-94.
    8. repec:spr:jbecon:v:87:y:2017:i:8:d:10.1007_s11573-017-0847-7 is not listed on IDEAS
    9. Joseph Y. Halpern & Samantha Leung, 2016. "Minimizing regret in dynamic decision problems," Theory and Decision, Springer, vol. 81(1), pages 123-151, June.
    10. Kevin X.D. Huang & Zheng Liu & John Qi Zhu, 2015. "Temptation and Self‐Control: Some Evidence and Applications," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(4), pages 581-615, June.
    11. Boyarchenko, Svetlana & Levendorskii, Sergei, 2010. "Discounting when income is stochastic and climate change policies," MPRA Paper 27998, University Library of Munich, Germany.
    12. Felipe Zurita, 2009. "La Economía Financiera Frente a la Crisis," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 46(134), pages 183-195.
    13. Abe, Koji, 2012. "A geometric approach to temptation," Journal of Mathematical Economics, Elsevier, vol. 48(2), pages 92-97.
    14. Roee Teper, 2016. "Learning the Krepsian State: Exploration Through Consumption," Working Paper 5860, Department of Economics, University of Pittsburgh.
    15. repec:eee:ecmode:v:70:y:2018:i:c:p:351-369 is not listed on IDEAS
    16. Carlos Bethencourt & Lars Kunze, 2017. "Temptation and the efficient taxation of education and labor," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 986-1000, November.
    17. Lu, Shih En, 2016. "Models of limited self-control: Comparison and implications for bargaining," Economics Letters, Elsevier, vol. 145(C), pages 186-191.
    18. repec:eee:jetheo:v:173:y:2018:i:c:p:201-230 is not listed on IDEAS
    19. Bodo Herzog, 2015. "Anchoring of expectations: The role of credible targets in a game experiment," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 3(6), pages 1-15, December.
    20. repec:eee:gamebe:v:107:y:2018:i:c:p:329-344 is not listed on IDEAS
    21. Lu, Shih En, 2016. "Self-control and bargaining," Journal of Economic Theory, Elsevier, vol. 165(C), pages 390-413.
    22. Noor, Jawwad & Takeoka, Norio, 2015. "Menu-dependent self-control," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 1-20.

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