Multiplicative habit formation and consumption: A note

A multiplicative form of the habit term in the utility function has some undesirable properties if the habit function is itself still additive (Wendner, 2003). A geometric form for the way the stock of habit accumulates can resolve these shortcomings.

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Year of publication:	2011
Authors:	Corrado, Luisa ; Holly, Sean
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 113.2011, 2, p. 116-119
Publisher:	Elsevier
Subject:	Habit formation \| Multiplicative habits \| Consumption

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Type of publication:	Article
Classification:	D11 - Consumer Economics: Theory ; D12 - Consumer Economics: Empirical Analysis ; D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010572157