A Theory of Chosen Preferences
56 Pages Posted: 2 Apr 2019 Last revised: 26 May 2020
Date Written: May 25, 2020
We propose and develop a dynamic theory of endogenous preference formation in which people adopt worldviews that shape their judgments about their experiences. The framework highlights the role of mindset flexibility, a trait that determines the relative weights the decision maker places on her current and anticipated worldviews when evaluating future outcomes. The theory generates rich behavioral dynamics, thereby illuminating a wide range of applications and providing potential explanations for a variety of observed phenomena.
Keywords: chosen preferences, endogenous preferences, time inconsistency, mindset flexibility
JEL Classification: D11, D90, D91
Suggested Citation: Suggested Citation