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Choice and Normative Preference

Jawwad Noor ()

No WP2005-039, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: Due to factors such as temptation, choices may not respect normative prefer- ence (the agent.s own, subjective view of what constitutes his welfare). Neverthe- less, the evidence on preference reversals suggests a means of recovering normative preference from choice. A de.nition of normative preference in terms of choices between su¢ ciently delayed alternatives is formulated and studied. Mild condi- tions on behavior are shown to ensure the existence of a normative preference. Two characterizations are provided. It is demonstrated that a notion of welfare may exist inspite of dynamic inconsistency of preferences. An application shows that the evidence on hyperbolic discounting implies that agents.normative discount functions must be exponential.

Keywords: Preference Reversals; Welfare; Temptation; Hyperbolic Discount- ing; Ethics. (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2005-10
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-hpe and nep-upt
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