Dynamic inconsistency theory

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

1 Citation (Scopus)


In this chapter, we discuss the Dynamic Inconsistency theory, which reflects a changing nature of economic agents’ preference over a period of time, and which could result in these preferences differing at some point in the preference continuum; this yields inconsistencies. This means that not all selected preferences are aligned, and that there is a misalignment somewhere in the preference continuum. In our observation, we point out that one of the reasons there is a shift from the original pre-commitment is that time presents economic agents with many options that they may not have considered when making decisions in T0 given the information at their disposal. For these reasons, we think dynamic inconsistency occurs because of the existence of imperfect information. We hold that in recent times, which are characterized by prominent utilization of artificial intelligence, and where we realize the emergence of large databases that store structured and unstructured data, the presence of AI-powered analytics will moderate inconsistencies. Using their strength, which lies in these two characteristics, we think intelligent agents will be swift in assisting the economic agents in harvesting information from different sources. Once gathered, this information will be analysed, which will reduce uncertainties, thus providing the agent with various options. Intelligent agents have the ability to store information, learn about the previous behaviour of the agent, and possibly pre-empt the next move that the agent is likely to take, while also providing basket options. We also think that AI would awaken the subconscious mind of the agent, challenging the notion of dynamic inconsistency with that of an informed choice. Our conclusion then is that AI will provide economic agents with a powerful tool that will allow them to make predictions with a certain degree of accuracy, thus moderating dynamic inconsistencies.

Original languageEnglish
Title of host publicationAdvanced Information and Knowledge Processing
Number of pages10
Publication statusPublished - 2020

Publication series

NameAdvanced Information and Knowledge Processing
ISSN (Print)1610-3947
ISSN (Electronic)2197-8441

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Information Systems and Management
  • Artificial Intelligence


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