Choice and Normative Preference
نویسنده
چکیده
Due to factors such as temptation, choices may not respect normative preference (the agents own, subjective view of what constitutes his welfare). Nevertheless, 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 conditions 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 agentsnormative discount functions must be exponential. Keywords: Preference Reversals, Welfare, Temptation, Hyperbolic Discounting, Ethics. JEL classi cation number : D11
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