Learning, experimentation and the convergence of the discovered preferences

Marek Kapera

No 2024-098, KAE Working Papers from Warsaw School of Economics, Collegium of Economic Analysis

Abstract: In this article I study whether the interim preferences of the consumer can be expected to converge to their real preferences in the process of preference discovery. I construct a subjective expected utility model of the consumer, where the uncertainty results from the imperfect knowledge of their own preferences. This uncertainty is partially resolved by experimental consumption. Under the assumption that the subjective probability of the consumer satisfies learning monotonicity, I identify the equivalent conditions for the consumer to experiment. My results show that the interim preferences never fully converge to the real preferences of the consumer. Instead, the preference discovery either terminates, meaning that the consumer ceases to experiment, or only experiments within some neighborhood of the best currently known alternative, and never sufficiently explores their preferences.

Keywords: Taste uncertainty; Preference discovery; Learning through consumption; Conditional preferences; Experimental preferences (search for similar items in EconPapers)
JEL-codes: D11 D83 D91 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2024-03
New Economics Papers: this item is included in nep-dcm, nep-exp, nep-mic and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:sgh:kaewps:2024098

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