Working paper

### Habits, Rationality and Myopia in the Life-Cycle Consumption Function.

Abstract:

This paper investigates the role of habits in the consumption function. Two types of habits are considered: rational and myopic, these being distinctions which have long been made in the literature on systems of demand equations. In both cases past consumption affects current preferences, thus breaking the intertemporal separability of preferences often assumed by economists. If habits are rational, consumers are aware of the effect of their current consumption decisions on their future margi...

### Authors

Publisher:
CEPR
Volume:
112
Series:
C.E.P.R.Discussion Papers
Host title:
C.E.P.R.Discussion Papers
Publication date:
1986-01-01
Paper number:
112
Language:
English
UUID:
uuid:8733237c-09c9-4ee6-aaa1-04a4401090ba
Local pid:
oai:economics.ouls.ox.ac.uk:11726
Deposit date:
2011-08-16