Foundations of Intrinsic Habit Formation
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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.
Rozen, Kareen, "Foundations of Intrinsic Habit Formation" (2008). Cowles Foundation Discussion Papers. 1943.