Aspiration Traps

Heifetz Aviad () and Enrico Minelli
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Heifetz Aviad: Department of Economics and Management, The Open University of Israel, Ra’anana, Israel

The B.E. Journal of Theoretical Economics, 2015, vol. 15, issue 2, 125-142

Abstract: Fundamental non-recurrent choices, like location or education, affect the attitudes and beliefs with which the individual consequently analyzes day-to-day decision problems. These effects cannot be assumed to be transparent to the individual. To restore methodological discipline in the analysis of such choices, we propose a solution concept based on an idea of self-justification and consistency: the individual should not regret her fundamental choice after her preferences and beliefs regarding day-to-day decisions have adjusted thereof. We show that even single-person fundamental choice problems admit multiple, Pareto-ranked solutions: the individual might be stuck in an aspiration trap.

Keywords: aspiration; fundamental choice (search for similar items in EconPapers)
JEL-codes: D03 D83 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/bejte-2013-0120

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