A Measure of Rationality and Welfare
AbstractThere is evidence showing that individual behavior often deviates from the classical principle of maximization. This evidence raises at least two important questions: (i) how severe the deviations are and (ii) which method is the best for extracting relevant information from choice behavior for the purposes of welfare analysis. In this paper we address these two questions by identifying from a foundational analysis a new measure of the rationality of individuals that enables the analysis of individual welfare in potentially inconsistent subjects, all based on standard revealed preference data. We call such measure minimal index.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 573.
Date of creation: Sep 2011
Date of revision:
Rationality; Individual Welfare; Revealed Preference;
Other versions of this item:
- Jose Apesteguia & Miguel Angel Ballester, 2010. "A Measure of Rationality and Welfare," Working Papers 467, Barcelona Graduate School of Economics.
- Jose Apesteguia & Miguel Angel Ballester, 2010. "A measure of rationality and welfare," Economics Working Papers 1220, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2011.
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D60 - Microeconomics - - Welfare Economics - - - General
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