Randomly Evolving Tastes and Delayed Commitment

  title={Randomly Evolving Tastes and Delayed Commitment},
  author={R. Vijay Krishna and Philipp Sadowski},
We consider a decision maker with randomly evolving tastes who faces dynamic decision situations that involve intertemporal tradeoffs, such as those in consumption savings problems. We axiomatize a recursive representation of choice that features uncertain consumption utilities, which evolve according to a subjective Markov process. The parameters of the representation, which are the subjective Markov process governing the evolution of utilities, and the discount factor, are uniquely identi ed… CONTINUE READING