A Theory of Chosen Preferences

56 Pages Posted: 2 Apr 2019 Last revised: 26 May 2020

See all articles by B. Douglas Bernheim

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Luca Braghieri

Bocconi University - Department of Decision Sciences

Alejandro Martínez-Marquina

University of Southern California - Marshall School of Business

David Zuckerman

Central Washington University, College of Business

Date Written: May 25, 2020

Abstract

We propose and develop a dynamic theory of endogenous preference formation in which people adopt worldviews that shape their judgments about their experiences. The framework highlights the role of mindset flexibility, a trait that determines the relative weights the decision maker places on her current and anticipated worldviews when evaluating future outcomes. The theory generates rich behavioral dynamics, thereby illuminating a wide range of applications and providing potential explanations for a variety of observed phenomena.

Keywords: chosen preferences, endogenous preferences, time inconsistency, mindset flexibility

JEL Classification: D11, D90, D91

Suggested Citation

Bernheim, B. Douglas and Braghieri, Luca and Martínez-Marquina, Alejandro and Zuckerman, David, A Theory of Chosen Preferences (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3350187 or http://dx.doi.org/10.2139/ssrn.3350187

B. Douglas Bernheim (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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Stanford, CA 94305-6072
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650-725-8732 (Phone)
650-725-5702 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Luca Braghieri

Bocconi University - Department of Decision Sciences ( email )

Via Roentgen 1
Milan, 20136
Italy

Alejandro Martínez-Marquina

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

David Zuckerman

Central Washington University, College of Business ( email )

Ellensburg, WA 98926
United States

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