On the identification of changing tastes

Maximilian Mihm, Kemal Ozbek

Research output: Contribution to journalArticle

Abstract

In a dynamic choice environment, an agent's tastes may change over time (e.g., due to present bias, habit formation, or reference dependence). These changes are often systematic with important welfare and policy implications. In this paper, we propose a framework to identify an agent's anticipation about how her preferences change over time and provide a heuristic measure that can inform the design of economic policies. In particular, our method resolves identification issues arising in the previous literature by using the intuitive idea that, while tastes can change, rankings are often monotone with respect to a suitable dominance relation.

Original languageEnglish (US)
Pages (from-to)203-216
Number of pages14
JournalGames and Economic Behavior
Volume116
DOIs
StatePublished - Jul 2019

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Keywords

  • Changing tastes
  • Consistent planning
  • Dominance relation
  • Dynamic choice

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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