How the market responds to dynamically inconsistent preferences
This 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.
|Date of creation:||01 Feb 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 1603 591131
Fax: +44(0)1603 4562592
Web page: http://www.uea.ac.uk/eco/
More information through EDIRC
|Order Information:|| Postal: Helen Chapman, School of Economics, University of East Anglia, Norwich Research Park, Norwich, NR4 7TJ, UK|
References listed on IDEAS
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.:
- Peter J. Hammond, 2003.
"Equal rights to trade and mediate,"
Social Choice and Welfare,
Springer, vol. 21(2), pages 181-193, October.
- Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 48(Jun).
- 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.
- Douglas Bernheim & Antonio Rangel, 2007. "Beyond Revealed Preference Choice Theoretic Foundations for Behavioral Welfare Economics," Discussion Papers 07-031, Stanford Institute for Economic Policy Research.
- 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.
- 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.
When requesting a correction, please mention this item's handle: RePEc:uea:wcbess:11-04. See general information about how to correct material in RePEc.
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.