Myopia and Inconsistency in Dynamic Utility Maximization
Abstract
R. H. Strotz; Myopia and Inconsistency in Dynamic Utility Maximization, The Review of Economic Studies, Volume 23, Issue 3, 1 January 1955, Pages 165–180, https
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Hyperbolic discounting helps explain violations of the stationarity axiom: preference for larger-later rewards when smaller-sooner rewards are unavailable reverses when the smaller-sooner reward is immediately accessible.
“The hyperbolic shape of the discounting function also helps to explain the previously mentioned violations of the stationarity axiom in economics (Strotz, 1955); i.e., the tendency to prefer LLRs when SSRs are not readily available, and to reverse this preference when the SSR is immediately accessible.”
From Changing Delay Discounting and Impulsive Choice: Implications for Addictions, Prevention, and Human Health (2019) · cites this paper as Strotz, 1955
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“Strotz (1956), E. S. Phelps and R. A. Pollak (1968), and George A. Akerlof (1991). Labeling as ut the per-period utility, the overall utility at time t, Ut , is”
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“The other—invoked by those interested in preference reversals (e.g., O'Donoghue and Rabin, 1999; Strotz, 1956; Rachlin and Green, 1972)—applies to a comparison within the same decision problem, but at different times.”
BackgroundThe Behavioral Revolution and International Relations
Hafner-Burton, E. M., Haggard, S. M., Lake, D. A., & Victor, D. G. (2017) · International Organization · doi:10.1017/s0020818316000400 · Cited by 291 · see citing works
“Allais 1953; Strotz 1955.”
The Economics and Psychology of Personality Traits
Borghans, L., Duckworth, A. L., Heckman, J. J., & ter Weel, B. (2008) · The Journal of Human Resources · doi:10.3368/jhr.43.4.972 · Cited by 1,614 · see citing works
Present Bias: Lessons Learned and To Be Learned
O’Donoghue, T., & Rabin, M. (2015) · American Economic Review · doi:10.1257/aer.p20151085 · Cited by 290 · see citing works
“These papers build on an earlier paper by Strotz (1956) that investigates general time-inconsistent preferences without special focus on the case of present bias.”
BackgroundKlein, P., Krusell, P. L., & Ŕıos-Rull, J.-V. (2008) · The Review of Economic Studies · doi:10.1111/j.1467-937x.2008.00491.x · Cited by 282 · see citing works
- Authors
- Strotz, R. H.
- Corresponding author
- Strotz, R. H.
- Venue
- The Review of Economic Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 1955
- Volume
- 23
- Issue
- 3
- Pages
- 165
- ISSN
- 0034-6527 (ISSN-L)
- OpenAlex
- W4251562186
- Cited by
- 2,834
- References
- 0
- Citations by year
- 2026: 62 · 2025: 116 · 2024: 145 · 2023: 119 · 2022: 95 · 2021: 140 · 2020: 171 · 2019: 149 · 2018: 134 · 2017: 117 · 2016: 111 · 2015: 104 · 2014: 78 · 2013: 92 · 2012: 93
- FWCI
- 0.00
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Review of Economic Studies (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Theory and Institutions
- Keywords
- myopia, inconsistency, time preference, intertemporal choice, consumer behavior
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