Revealed preferences for dynamically inconsistent models
Theoretical Economics
2023-07-28 v2
Abstract
We study the testable implications of models of dynamically inconsistent choices when planned choices are unobservable, and thus only "on path" data is available. First, we discuss the approach in Blow, Browning and Crawford (2021), who characterize first-order rationalizability of the model of quasi-hyperbolic discounting. We show that the first-order approach does not guarantee rationalizability by means of the quasi-hyperbolic model. This motivates consideration of an abstract model of intertemporal choice, under which we provide a characterization of different behavioral models -- including the naive and sophisticated paradigms of dynamically inconsistent choice.
Cite
@article{arxiv.2305.14125,
title = {Revealed preferences for dynamically inconsistent models},
author = {Federico Echenique and Gerelt Tserenjigmid},
journal= {arXiv preprint arXiv:2305.14125},
year = {2023}
}