Memorable consumption

Itzhak Gilboa, Andrew Postlewaite*, Larry Samuelson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


People often consume non-durable goods in a way that seems inconsistent with preferences for smoothing consumption over time. We suggest that such patterns of consumption can be better explained if one takes into account the future utility flows generated by memorable consumption goods-goods, such as a honeymoon or a vacation, whose utility flow outlives their physical consumption. We consider a model in which a consumer enjoys current consumption as well as utility generated by earlier memorable consumption. Lasting utility flows are generated only by some goods, and only when their consumption exceeds customary levels by a sufficient margin. We offer axiomatic foundations for the structure of the utility function and study optimal consumption in a dynamic model. We show that rational consumers, taking into account future utility flows, would make optimal choices that rationalize lumpy patterns of consumption.

Original languageEnglish
Pages (from-to)414-455
Number of pages42
JournalJournal of Economic Theory
StatePublished - 1 Sep 2016


FundersFunder number
National Science FoundationSES-1153893, SES-1260753, SES-1459158
Israel Science Foundation204/14
European Research Council269754


    • Consumption smoothing
    • Consumption volatility
    • Memorable goods


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