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On the identification of changing tastes

Maximilian Mihm and Kemal Ozbek

Games and Economic Behavior, 2019, vol. 116, issue C, 203-216

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.

Keywords: Changing tastes; Consistent planning; Dynamic choice; Dominance relation (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:116:y:2019:i:c:p:203-216

DOI: 10.1016/j.geb.2019.04.014

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