Cumulative Utility and Consumer Theory

Itzhak Gilboa (1) , David Schmeidler (2, 3)

1 Northwestern University [Evanston]
2 TAU - Tel Aviv University
3 OSU - Ohio State University [Columbus]

This paper makes some preliminary steps towards a dynamic theory of consumer choices, restricted to the case of repeated small decisions. The authors assume that the consumer chooses among products, rather than among bundles, and that she bases her decision on a cumulative satisfaction index. The (instantaneous) utility of a product is closely related to the relative frequency with which it is consumed. The aggregation of choices among products implicitly defines a choice of a bundle. The authors propose to incorporate a product's price directly into its utility and show that it is consistent with balancing the consumer's budget. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Mots clés: Cumulative Utility; Consumer Theory

Domaines: Economie et sciences de la décision

Itzhak Gilboa, David Schmeidler. Cumulative Utility and Consumer Theory. International Economic Review, 1997, vol. 38, issue 4, pp. 737-761. ⟨hal-00753137⟩