EconPapers    
Economics at your fingertips  
 

Understanding time-inconsistent heterogeneous preferences in economics and finance: a practice theory approach

Panagiotis Andrikopoulos () and Nick Webber ()
Additional contact information
Nick Webber: University of Birmingham

Annals of Operations Research, 2019, vol. 282, issue 1, 3-26

Abstract: Abstract This paper introduces an innovative framework for decision making by individuals with inconsistent preferences. Practices, associations of individuals with a preference set shared by its members, provide context and unify preferences across an economy so that decision-makers are situated in social and economic structures. Our framework models the time evolution of certain attributes, emerging from the practice framework, that govern individuals’ decisions and their intertemporal variation. A novel feature is that preferences are able to rank other preference sets without the need to aggregate them. Instead, the selection of a preference set is treated as a decision in its own right. Our framework explains decision making paradoxes such as the disposition effect and agency cost considerations that are frequently encountered in the behavioural finance and economics literature.

Keywords: Intertemporal choice; Time-inconsistent preferences; Multiple selves; Disposition effect; Decision theory (search for similar items in EconPapers)
JEL-codes: D81 D91 G40 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10479-018-2836-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:282:y:2019:i:1:d:10.1007_s10479-018-2836-9

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-018-2836-9

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-03-29
Handle: RePEc:spr:annopr:v:282:y:2019:i:1:d:10.1007_s10479-018-2836-9