Dynamic Preference “Reversals” and Time Inconsistency

Time inconsistency leads people to revise earlier plans, which has motivated em-pirical designs attempting to document such choice revisions. We study identificationof time inconsistency in designs where an agent’s preferences are elicited in advanceat time 0, and then again later at time 1, after they might have received additionaldecision-relevant information. We show that for single-peaked preferences, the onlydata that rejects time-consistent expected utility maximization is when an agent’stime-1 ranking between a pair of alternatives is the reverse of their time-0 rankingwith probability one. We establish variations of this result under a variety of otherassumptions. However, such patterns of choice are rarely observed in practice. Tofacilitate more robust identification, we present results about special conditions underwhich the degree of time inconsistency can be estimated.