Dynamically consistent menu preferences

We provide a unified analysis of dynamically consistent menu preferences in which an agent may exhibit a preference for flexibility, a preference for commitment, or both. Our work generalizes prior results, which investigated this problem for an agent who always exhibits preference for flexibility....

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Bibliographic Details
Published in:Economic theory 2024-12, Vol.78 (4), p.1047-1074
Main Authors: Higashi, Youichiro, Hyogo, Kazuya, Riella, Gil
Format: Article
Language:English
Subjects:
Beer
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Expected utility
Flexibility
Game Theory
Microeconomics
Preferences
Public Finance
Regret
Research Article
Restaurants
Social and Behav. Sciences
Subjective states
Temptation
Uncertainty
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Summary:We provide a unified analysis of dynamically consistent menu preferences in which an agent may exhibit a preference for flexibility, a preference for commitment, or both. Our work generalizes prior results, which investigated this problem for an agent who always exhibits preference for flexibility. By using two types of consistency conditions, we characterize an agent with a subjective state space who reacts to information about her subjective states in a dynamically consistent way. We apply our results to the uncertain strength of temptation and the anticipating regret representations, and characterize a dynamically consistent updating of the no-uncertainty representation.
ISSN:0938-2259
1432-0479
DOI:10.1007/s00199-024-01593-6