Template-Type: ReDIF-Paper 1.0

Author-Name: Jawwad Noor
Author-X-Name-First: Jawwad 
Author-X-Name-Last: Noor
Author-Email: jnoor@bu.edu.
Author-Workplace-Name: Department of Economics, Boston University


Title: Choice and Normative Preference


Abstract: Due to factors such as temptation, choices may not respect normative prefer-
ence (the agent.s own, subjective view of what constitutes his welfare). Neverthe-
less, the evidence on preference reversals suggests a means of recovering normative
preference from choice. A de.nition of normative preference in terms of choices
between su¢ ciently delayed alternatives is formulated and studied. Mild condi-
tions on behavior are shown to ensure the existence of a normative preference. Two
characterizations are provided. It is demonstrated that a notion of welfare may
exist inspite of dynamic inconsistency of preferences. An application shows that
the evidence on hyperbolic discounting implies that agents.normative discount
functions must be exponential.


Length: 38 pages
Creation-Date: 2005-10
Revision-Date: 
Publication-Status:
File-URL: http://www.bu.edu/econ/workingpapers/papers/Jawwad%20Noor/wp2005/choiceandnormativepreference.pdf
File-Format: Application/pdf
File-Function: 
Number: WP2005-039
Classification-JEL: D11
Keywords: Preference Reversals, Welfare, Temptation, Hyperbolic Discount-
ing, Ethics.
Handle: RePEc:bos:wpaper:WP2005-039