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A Course in Microeconomic Theory$
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David M. Kreps

Print publication date: 2020

Print ISBN-13: 9780691202754

Published to Princeton Scholarship Online: May 2021

DOI: 10.23943/princeton/9780691202754.001.0001

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PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 17 September 2021

Dynamic choice

Dynamic choice

Chapter:
(p.132) (p.133) Chapter Four Dynamic choice
Source:
A Course in Microeconomic Theory
Author(s):

David M. Kreps

Publisher:
Princeton University Press
DOI:10.23943/princeton/9780691202754.003.0004

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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