Behavioural Decisions and Welfare
AbstractWhat are the normative implications of behavioral economics? We study a model where the decisions a person makes, consciously or unconsciously, affect her psychological state (reference point, beliefs, expectations, self-image) which, in turn, impacts on her ranking over available decisions in the first place. We distinguish between standard decisions where the decision-maker internalizes the feedback from her actions to her psychological state, and behavioural decisions where the psychological state is taken as given (although a decision outcome requires that action and psychological state are mutually consistent). In a behavioural decision, the individual imposes an externality on herself. We provide an axiomatic characterization of behavioral decisions. We show that the testable implications of behavioral and standard decisions are different and the outcomes of the two decision problems are, typically, distinguishable. We discuss the consequences for public policy of our formal analysis and over normative grounds for subsidized psychological therapies
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 06.
Date of creation: 2010
Date of revision:
Contact details of provider:
Postal: CV4 7AL COVENTRY
Phone: +44 (0) 2476 523202
Fax: +44 (0) 2476 523032
Web page: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/
More information through EDIRC
Behavioural Decisions; Indistinguishabilty; revealed preferences; normative preferences; welfare; paternalism; autonomy; existence;
Other versions of this item:
- Dalton, Patricio & Ghosal, Sayantan, 2008. "Behavioural Decisions and Welfare," The Warwick Economics Research Paper Series (TWERPS) 834, University of Warwick, Department of Economics.
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- B. Douglas Bernheim, 2008.
"Behavioral Welfare Economics,"
NBER Working Papers
14622, National Bureau of Economic Research, Inc.
- B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
- B. Douglas Bernheim, 2010. "Behavioral welfare economics," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(2), pages 123-151, June.
- B. Douglas Bernheim, 2010. "Behavioral welfare economics," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(1), pages 1-22, March.
- Dalton, Patricio S. & Ghosal, Sayantan, 2013.
"Characterizing Behavioral Decisions with Choice Datas,"
SIRE Discussion Papers
2013-86, Scottish Institute for Research in Economics (SIRE).
- Patricio S. Dalton & Sayantan Ghosal, 2013. "Characterizing behavioral decisions with choice data," Working Papers 2013_22, Business School - Economics, University of Glasgow.
- Ghosal, Sayantan & Dalton, Patricio, 2013. "Characterizing Behavioral Decisions with Choice Data," CAGE Online Working Paper Series 106, Competitive Advantage in the Global Economy (CAGE).
- FLEURBAEY, Marc & SCHOKKAERT, Erik, 2011.
"Behavioral fair social choice,"
CORE Discussion Papers
2011043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Dalton, Patricio; Ghosal, Sayantan;, 2010.
"Decisions with Endogenous Frames,"
CAGE Online Working Paper Series
30, Competitive Advantage in the Global Economy (CAGE).
- Dalton, Patricio S; Ghosal, Sayantan; Mani, Anandi, 2010.
"Poverty and Aspirations Failure,"
CAGE Online Working Paper Series
22, Competitive Advantage in the Global Economy (CAGE).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Snape).
If references are entirely missing, you can add them using this form.