Tractable Consumer Choice

József Sákovics and Daniel Friedman

No 2013-108, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: We derive a rational model of separable consumer choice which can also serve as a behavioral model. The central construct is [lambda] , the marginal utility of money, derived from the consumer's rest-of-life problem. We present a robust approximation of [lambda], and show how to incorporate liquidity constraints, indivisibilities and adaptation to a changing environment. We fi nd connections with numerous historical and recent constructs, both behavioral and neoclassical, and draw contrasts with standard partial equilibrium analysis. The result is a better grounded, more flexible and more intuitive description of consumer choice.

Keywords: distributed choice; moneysworth demand; value for money (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-mic and nep-upt
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Tractable consumer choice (2015)
Working Paper: Tractable consumer choice (2015)
Working Paper: Tractable Consumer Choice (2013)
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