Competitive equilibrium when preferences change over time

Erzo Luttmer and Thomas Mariotti

Economic Theory, 2006, vol. 27, issue 3, 679-690

Abstract: We show the existence of a competitive equilibrium in an economy with many consumers whose preferences may change over time. The demand correspondence of an individual consumer is determined by the set of subgame-perfect equilibrium outcomes in his intrapersonal game. For additively separable preferences with concave period utility functions that are unbounded above, this demand correspondence will satisfy the usual boundary conditions. Whenever consumers can recall their own mixed actions, this correspondence is convex-valued. This ensures the existence of a symmetric competitive equilibrium. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Changing preferences; Competitive equilibrium. (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s00199-004-0586-1

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