Foundations of Intrinsic Habit Formation

Kareen Rozen ()

No 1642R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We provide theoretical foundations for several common (nested) representations of intrinsic linear habit formation. Our axiomatization introduces an intertemporal theory of weaning a decision-maker from her habits using the device of compensation. We clarify differences across specifications of the model, provide measures of habit-forming tendencies, and suggest methods for axiomatizing time-nonseparable preferences.

Keywords: Time-nonseparable preferences; Linear habit formation; Weaning; Compensated separability; Gains monotonicity (search for similar items in EconPapers)
JEL-codes: C60 D11 D90 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2008-03, Revised 2009-03
Note: Includes supplemental material
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Econometrica, 2010

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Related works:
Journal Article: Foundations of Intrinsic Habit Formation (2010)
Working Paper: Foundations of Intrinsic Habit Formation (2008)
Working Paper: Foundations of Intrinsic Habit Formation (2008)
Working Paper: Foundations of Intrinsic Habit Formation (2008)
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