On the Identification of Changing Tastes

24 Pages Posted: 4 Feb 2019 Last revised: 14 May 2019

See all articles by Maximilian Mihm

Maximilian Mihm

New York University (NYU) - Abu Dhabi

Kemal Ozbek

University of St Andrews, School of Economics & Finance

Date Written: January 21, 2019

Abstract

In a dynamic choice environment, an agent's tastes may change over time (e.g., due to present bias, habit formation, or reference dependence). These changes are often systematic with important welfare and policy implications. In this paper, we propose a framework to identify an agent's anticipation about how her preferences change over time and provide a heuristic measure that can inform the design of economic policies. In particular, our method resolves identification issues arising in the previous literature by using the intuitive idea that, while tastes can change, rankings are often monotone with respect to a suitable dominance relation.

Keywords: changing tastes, consistent planning, dynamic choice, dominance relation

JEL Classification: D11, D15, D91

Suggested Citation

Mihm, Maximilian and Ozbek, Kemal, On the Identification of Changing Tastes (January 21, 2019). Available at SSRN: https://ssrn.com/abstract=3320334 or http://dx.doi.org/10.2139/ssrn.3320334

Maximilian Mihm

New York University (NYU) - Abu Dhabi ( email )

Abu Dhabi
United Arab Emirates

Kemal Ozbek (Contact Author)

University of St Andrews, School of Economics & Finance ( email )

Castlecliffe, The Scores
St Andrews, Fife KY16 9AR
United Kingdom

HOME PAGE: http://https://sites.google.com/a/cornell.edu/kemal-ozbek/home

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