Identifying changing taste from demand data via golden eggs

Guy Barokas ()
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Guy Barokas: Ruppin Academic Center

Social Choice and Welfare, 2020, vol. 54, issue 1, No 2, 47-68

Abstract: Abstract The paper provides choice theoretic foundations for impulsive behavior and changing taste. Similar to other studies in the literature, revelation is possible owing to self-limitation. However, in contrast to the usual unrealistic assumption that self-limitation opportunities are exogenous and observable, we follow Laibson’s classical paper by allowing for self-limitation through investing only in illiquid assets. This approach allows us to identify impulsive behavior and changing taste using only standard demand data. In addition, we provide a refinement for an individual’s welfare that is based on libertarian considerations. The refinement uniquely identifies the revealed impulsiveness in our model, and ultimately leads to a notion of comparative impulsiveness. Finally, we relate the comparative impulsiveness in our model to existing measures of (ir)rationality.

Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s00355-019-01211-8

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