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Dynamic Inconsistency, Commitment, and Welfare in Strategic Settings

Author

Listed:
  • Asen Ivanov

    (School of Economics and Finance, Queen Mary University London)

Abstract

The choices of a dynamically inconsistent individual depend on whether she commits to consumption ahead of time or chooses consumption in the moment. In individual-choice settings, it is normatively ambiguous whether such an individual’s choices with commitment or in the moment are “better”. This impasse can be overcome in settings in which dynamically inconsistent individuals interact strategically. Policy implications are discussed.

Suggested Citation

  • Asen Ivanov, 2023. "Dynamic Inconsistency, Commitment, and Welfare in Strategic Settings," Working Papers 954, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:954
    as

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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/wp954.pdf
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
    2. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 51-104.
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    More about this item

    Keywords

    dynamic inconsistency; commitment; welfare;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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