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A taste for variety

Author

Listed:
  • Ashkenazi Golan, Galit
  • Karos, Dominik
  • Lehrer, Ehud

Abstract

A decision maker repeatedly chooses one of a finite set of actions. In each period, the decision maker's payoff depends on a fixed basic payoff of the chosen action and the frequency with which the action has been chosen in the past. We analyze optimal strategies associated with three types of evaluations of infinite payoffs: discounted present value, the limit inferior, and the limit superior of the partial averages. We show that when the first two are the evaluation schemes (and the discount factor is sufficiently high), a stationary strategy can achieve the best possible outcome. However, for the latter evaluation scheme, a stationary strategy can achieve the best outcome only if all actions that are chosen with strictly positive frequency by an optimal stationary strategy have the same basic payoff.

Suggested Citation

  • Ashkenazi Golan, Galit & Karos, Dominik & Lehrer, Ehud, 2025. "A taste for variety," LSE Research Online Documents on Economics 128109, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:128109
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    More about this item

    Keywords

    repeated decision problem; intertemporal choice; time-inconsistent preferences; habit formation;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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