Foundations of Intrinsic Habit Formation

Authors

Kareen Rozen

Document Type

Discussion Paper

Publication Date

3-1-2008

CFDP Number

1642R

CFDP Revision Date

2009-03-01

CFDP Pages

39

Abstract

We provide theoretical foundations for several common (nested) representations of intrinsic linear habit formation. Our axiomatization introduces an intertemporal theory of weaning a decision-maker from her habits using the device of compensation. We clarify differences across specifications of the model, provide measures of habit-forming tendencies, and suggest methods for axiomatizing time-nonseparable preferences.

Recommended Citation

Rozen, Kareen, "Foundations of Intrinsic Habit Formation" (2008). Cowles Foundation Discussion Papers. 1943.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/1943