How the market responds to dynamically inconsistent preferences

McQuillin, Ben and Sugden, Robert (2012) How the market responds to dynamically inconsistent preferences. Social Choice and Welfare, 38 (4). pp. 617-634. ISSN 0176-1714

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Abstract

This paper responds to the ‘soft paternalist’ argument that the findings of behavioural economics make traditional objections to paternalism incoherent. We show that there is a normatively significant sense in which, even if individuals lack coherent preferences, competitive markets are efficient in providing them with opportunities to get what they want. Extending earlier analysis by Sugden, we model a multi-period ‘storage economy’ and explore the implications of dynamically inconsistent preferences. We show that, despite apparent conflicts of judgement between an individual’s ‘selves’, competitive markets provide maximal opportunity, and that they do so by facilitating voluntary exchanges between selves.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
Depositing User: Julie Frith
Date Deposited: 08 Apr 2011 15:52
Last Modified: 06 Nov 2018 15:35
URI: https://ueaeprints.uea.ac.uk/id/eprint/28693
DOI: 10.1007/s00355-011-0628-0

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