Dynamic choice
Dynamic choice
This chapter investigates the issue of dynamic choice. Many important choices made in economic contexts are made through time. The consumer takes some action today, knowing that subsequent choices will be required tomorrow and the day following and so on. And today's choice has impact on either how the consumer views later choices or what choices will later be available or both. This can be referred to as a situation of dynamic choice. The chapter discusses how economists model the process of dynamic choice. In microeconomics, the issue of dynamic choice is usually dealt with by reducing dynamic choice to the static choice of an optimal dynamic strategy which is then carried out. The chapter examines this standard approach before considering a pair of alternatives.
Keywords: dynamic choice, consumer choice, microeconomics, static choice, optimal dynamic strategy
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