The Revealed Preference Theory of Changing Tastes

Faruk Gul and Wolfgang Pesendorfer ()

The Review of Economic Studies, 2005, vol. 72, issue 2, 429-448

Abstract: We analyse preferences over finite decision problems in order to model decision-makers with "changing tastes". we provide conditions on these preferences that identify the Strotz model of consistent planning. building on an example given by Peleg and Yaari (1973) , we show that for problems with infinitely many choices, Strotz's representation of preferences may not be well defined. For that case, we propose a well-defined approximation which is empirically indistinguishable from the Strotz preference that is being approximated. Copyright 2005, Wiley-Blackwell.

Date: 2005
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