Taste for Variety: An Intertemporal Choice Model [Draft]

Variety-seeking behavior refers to the tendency to alternate between different products to experience diversity or variety in consumption over time. It is a prominent and well-documented driver of individual decision-making and has attracted much attention in the marketing, psychology, and economics literature. In spite of that, the vast majority of intertemporal choice models assume some form of time-separability, implying consumption independence and therefore making them unable to account for variety-seeking behavior. This paper addresses this issue by presenting, studying, and axiomatically characterizing a new discrete choice model of time-risk preferences consistent with variety-seeking behavior. I refer to this model as the history-discounted utility (HDU) model. In the HDU model, consumption independence is relaxed by allowing for a history-dependent utility function. The biological/psychological driver of variety-seeking behavior is a satiation and recovery process in which product enjoyability decreases with consumption and recovers back to its intrinsic level otherwise. The main advantage of the axiomatic characterization presented in this paper is that simple and intuitive axioms allow disentangling the effects from time discounting from history dependence, providing a new framework to axiomatize time-nonseparable preferences.

I demonstrate the broad scope of applicability of the HDU model by analyzing two different applications. In the first application, I study a multiproduct monopolist's optimal dynamic pricing strategies in intertemporal discrete choice settings facing variety-seeking consumers. In the second application, I show how the tools provided by the HDU model can help tackle one of the most urgent threats to public health, antibiotic resistance. In particular, I show how the HDU model can be used to design antibiotic treatment plans to fight bacterial infections more effectively while minimizing the threat of developing antibiotic resistance.

Variety-seeking Consumption Patterns and Multiproduct Monopolists’ Dynamic Pricing Strategies (with Daniel Sánchez) [Draft]

This paper studies multiproduct monopolists' optimal dynamic pricing strategies when facing variety-seeking consumers with different degrees of foresight. We fully characterize variety-seeking consumption patterns and monopolists' optimal dynamic pricing strategy. We show that with such a pricing strategy, the monopolist can impose any consumption path on all consumers, regardless of their degree of foresight. Hence, the monopolist's profit maximization problem is reduced to choosing the optimal consumption path that maximizes society's total surplus. Interestingly, the monopolist's optimal pricing strategy induces myopic agents to act like forward-looking agents, allowing the firm to extract total surplus from both types of agents.

Short-term Effects of air Pollution on Adolescents' Economic and Social Preferences (with Jose Apesteguia, Xavier Basagaña, Ayah Bohsali, and Humberto Llavador)

The negative impact of pollution on climate change, health, productivity, cognition, and other variables is well-established. In this paper, we are concerned with the consequences of pollution on economic preferences, such as risk, time, and social. We report on the first randomized-controlled experiment on the subject matter. 2,122 high schoolers from 33 high schools in the metropolitan area of Barcelona were randomly allocated into two types of classrooms for 1.5 hours with functioning air purifiers. Still, only one had a filter that effectively purified air conditions. We elicited economic preferences using the Global Preference Survey. We do not identify any significant difference between treatment and control. We conjecture that our cleaning strategy requires longer interventions. A second main contribution of this paper is that we provide an up-to-date survey of the fast-growing literature on the impact of pollution on economic preferences.

Rodriguez, Jorge; Puig, David; and Sobrino, Cristina (2014). ``Poly and Distinct Victimization in Histories of Violence Against Women'',   Journal of Family Violence, 29(8), pp 849-858.