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Dynamic theory of preferences: Habit formation and taste for variety

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  • Rustichini, Aldo
  • Siconolfi, Paolo

Abstract

We analyze individual preferences over infinite horizon consumption choices. Our axioms provide the foundation for a recursive representation of the utility function that contains as particular cases the classical Koopmans representation (Koopmans (1960)) as well as the habit formation specification.

Suggested Citation

  • Rustichini, Aldo & Siconolfi, Paolo, 2014. "Dynamic theory of preferences: Habit formation and taste for variety," Journal of Mathematical Economics, Elsevier, vol. 55(C), pages 55-68.
    • Handle: RePEc:eee:mateco:v:55:y:2014:i:c:p:55-68
    DOI: 10.1016/j.jmateco.2014.10.002
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    References listed on IDEAS

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    6. Lawrence J. Christiano & Michele Boldrin & Jonas D. M. Fisher, 2001. "Habit Persistence, Asset Returns, and the Business Cycle," American Economic Review, American Economic Association, vol. 91(1), pages 149-166, March.
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    8. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-543, June.
    9. Monteiro, Paulo Klinger, 1987. "Some results on the existence of utility functions on path connected spaces," Journal of Mathematical Economics, Elsevier, vol. 16(2), pages 147-156, April.
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    Cited by:

    1. Havranek, Tomas & Rusnak, Marek & Sokolova, Anna, 2017. "Habit formation in consumption: A meta-analysis," European Economic Review, Elsevier, vol. 95(C), pages 142-167.
    2. Steve Fleetwood, 2021. "A definition of habit for socio-economics," Review of Social Economy, Taylor & Francis Journals, vol. 79(2), pages 131-165, April.
    3. Jungeilges, Jochen & Pavletsov, Makar & Perevalova, Tatyana, 2022. "Noise-induced behavioral change driven by transient chaos," Chaos, Solitons & Fractals, Elsevier, vol. 158(C).
    4. Morhaim, Lisa & Ulus, Ayşegül Yıldız, 2023. "On history-dependent optimization models: A unified framework to analyze models with habits, satiation and optimal growth," Journal of Mathematical Economics, Elsevier, vol. 105(C).
    5. Gerelt Tserenjigmid, 2020. "On the characterization of linear habit formation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 49-93, July.
    6. Ekaterina Ekaterinchuk & Jochen Jungeilges & Tatyana Ryazanova & Iryna Sushko, 2017. "Dynamics of a minimal consumer network with uni-directional influence," Journal of Evolutionary Economics, Springer, vol. 27(5), pages 831-857, November.

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