endogenous preferences

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Individual preferences that form under the influence of the economic, social, legal, and cultural structure of the environment and may change in response to changes in the environment. For example, consumers' tastes for a particular good can be shaped by advertising, or investors' risk aversion can be affected by market arrangements. Under the assumption of endogeneity of preferences, the environment and the preferences are interdependent and are jointly determined in equilibrium.

Subjects: Economics.

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