Modelling Change in Individual Characteristics: An Axiomatic Framework

Games and Economic Behavior 76 (5):471-94 (2012)
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Abstract

Economic models describe individuals in terms of underlying characteristics, such as taste for some good, sympathy level for another player, time discount rate, risk attitude, and so on. In real life, such characteristics change through experiences: taste for Mozart changes through listening to it, sympathy for another player through observing his moves, and so on. Models typically ignore change, not just for simplicity but also because it is unclear how to incorporate change. I introduce a general axiomatic framework for defining, analysing and comparing rival models of change. I show that seemingly basic postulates on modelling change together have strong implications, like irrelevance of the order in which someone has his experiences and ‘linearity’ of change. This is a step towards placing the modelling of change on solid axiomatic grounds and enabling non-arbitrary incorporation of change into economic models.

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Franz Dietrich
Centre National de la Recherche Scientifique

Citations of this work

Bayesian group belief.Franz Dietrich - 2010 - Social Choice and Welfare 35 (4):595-626.
Where do preferences come from?Franz Dietrich & Christian List - 2013 - International Journal of Game Theory 42 (3):613-637.
Aggregating Causal Judgments.Richard Bradley, Franz Dietrich & Christian List - 2014 - Philosophy of Science 81 (4):491-515.

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References found in this work

.Michèle Friend - 2013 - Les Cahiers D'Ithaque.
Adaptive utility.Richard M. Cyert & Morris H. DeGroot - 1979 - In Maurice Allais & Ole Hagen (eds.), Expected Utility Hypotheses and the Allais Paradox. D. Reidel. pp. 223--241.

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