Beyond Revealed Preference: Choice Theoretic Foundations for Behavioral Welfare Economics
AbstractWe propose a broad generalization of standard choice-theoretic welfare economics that encompasses a wide variety of non-standard behavioral models. Our approach exploits the coherent aspects of choice which those positive models typically attempt to capture. It replaces the standard revealed preference relation with an unambiguous choice relation: roughly, x is (strictly) unambiguously chosen over y (written xP*y) if y is never chosen when x is available. Under weak assumptions, P* is acyclic and therefore suitable for welfare analysis; it is also the most discerning welfare criterion that never overrules choice. The resulting framework generates natural counterparts for the standard tools of applied welfare economics, and is easily applied in the context of specific behavioral theories, with novel implications. Though not universally discerning, it lends itself to principled refinements.
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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13737.
Date of creation: Jan 2008
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Douglas Bernheim & Antonio Rangel, 2007. "Beyond Revealed Preference Choice Theoretic Foundations for Behavioral Welfare Economics," Discussion Papers 07-031, Stanford Institute for Economic Policy Research.
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D60 - Microeconomics - - Welfare Economics - - - General
- H40 - Public Economics - - Publicly Provided Goods - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-26 (All new papers)
- NEP-EVO-2008-01-26 (Evolutionary Economics)
- NEP-HPE-2008-01-26 (History & Philosophy of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2002.
"Rationalizing Choice Functions By Multiple Rationales,"
Econometric Society, vol. 70(6), pages 2481-2488, November.
- Gil Kalai & Ariel Rubenstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Economics Working Papers 0010, Institute for Advanced Study, School of Social Science.
- Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2001. "Rationalizing Choice Functions by Multiple Rationales," Discussion Paper Series dp278, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- Green, Jerry & Hojman, Daniel, 2007. "Choice, Rationality and Welfare Measurement," Working Paper Series rwp07-054, Harvard University, John F. Kennedy School of Government.
- Ariel Rubinstein & Yuval Salant, 2007. "(A,f) Choice with Frames," Levine's Bibliography 843644000000000029, UCLA Department of Economics.
- Caplin, Andrew & Leahy, John, 1997.
"Psychological Expected Utility Theory and Anticipatory Feelings,"
97-37, C.V. Starr Center for Applied Economics, New York University.
- Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory And Anticipatory Feelings," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 55-79, February.
- Faruk Gul & Wolfgang Pesendorfer, 2001.
"Temptation and Self-Control,"
Econometric Society, vol. 69(6), pages 1403-1435, November.
- Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
- Faruk Gul & Wolfgang Pesendorfer, 2006.
"Random Expected Utility,"
Econometric Society, vol. 74(1), pages 121-146, 01.
- Suzumura, Kataro, 1976. "Remarks on the Theory of Collective Choice," Economica, London School of Economics and Political Science, vol. 43(172), pages 381-90, November.
- Mas-Colell, Andrew, 1974. "An equilibrium existence theorem without complete or transitive preferences," Journal of Mathematical Economics, Elsevier, vol. 1(3), pages 237-246, December.
- Raj Chetty & Adam Looney & Kory Kroft, 2009.
"Salience and taxation: theory and evidence,"
Finance and Economics Discussion Series
2009-11, Board of Governors of the Federal Reserve System (U.S.).
- Dan Ariely & George Loewenstein & Drazen Prelec, 2003. ""Coherent Arbitrariness": Stable Demand Curves Without Stable Preferences," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 73-105, February.
- Gale, D. & Mas-Colell, A., 1975. "An equilibrium existence theorem for a general model without ordered preferences," Journal of Mathematical Economics, Elsevier, vol. 2(1), pages 9-15, March.
- Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 2000.
"Time inconsistent preferences and Social Security,"
Discussion Paper / Institute for Empirical Macroeconomics
136, Federal Reserve Bank of Minneapolis.
- O'Donoghue, Ted & Rabin, Matthew, 1997.
"Doing It Now or Later,"
Department of Economics, Working Paper Series
qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Ted O'Donoghue and Matthew Rabin ., 1997. "Doing It Now or Later," Economics Working Papers 97-253, University of California at Berkeley.
- Ted O'Donoghue & Matthew Rabin, 1996. "Doing It Now or Later," Discussion Papers 1172, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Daniel Burghart & Trudy Cameron & Geoffrey Gerdes, 2007. "Valuing publicly sponsored research projects: Risks, scenario adjustments, and inattention," Journal of Risk and Uncertainty, Springer, vol. 35(1), pages 77-105, August.
- Rigotti, Luca & Shannon, Chris, 2001.
"Uncertainty and Risk in Financial Markets,"
Department of Economics, Working Paper Series
qt7pp7113z, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Luca Rigotti & Chris Shannon=20, 2002. "Uncertainty and Risk in Financial Markets," Game Theory and Information 0201001, EconWPA.
- Rigotti, Luca & Shannon, Chris, 2001. "Uncertainty and Risk in Financial Markets," Department of Economics, Working Paper Series qt6m42r5rr, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Laibson, David I., 1997.
"Golden Eggs and Hyperbolic Discounting,"
4481499, Harvard University Department of Economics.
- Shafer, Wayne & Sonnenschein, Hugo, 1975.
"Equilibrium in abstract economies without ordered preferences,"
Journal of Mathematical Economics,
Elsevier, vol. 2(3), pages 345-348, December.
- Wayne Shafer & Hugo Sonnenschein, 1974. "Equilibrium in Abstract Economies Without Ordered Preferences," Discussion Papers 94, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bossert, Walter & Sprumont, Yves & Suzumura, Kotaro, 2002.
82, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Robert Sugden, 2004. "The Opportunity Criterion: Consumer Sovereignty Without the Assumption of Coherent Preferences," American Economic Review, American Economic Association, vol. 94(4), pages 1014-1033, September.
- David I. Laibson & Andrea Repetto & Jeremy Tobacman, 1998. "Self-Control and Saving for Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 91-196.
- Richard H. Thaler & Cass R. Sunstein, 2003. "Libertarian Paternalism," American Economic Review, American Economic Association, vol. 93(2), pages 175-179, May.
- Fon, Vincy & Otani, Yoshihiko, 1979. "Classical welfare theorems with non-transitive and non-complete preferences," Journal of Economic Theory, Elsevier, vol. 20(3), pages 409-418, June.
- Ehlers, Lars & Sprumont, Yves, 2008. "Weakened WARP and top-cycle choice rules," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 87-94, January.
- Jay Bhattacharya & Darius Lakdawalla, 2004. "Time-Inconsistency and Welfare," NBER Working Papers 10345, National Bureau of Economic Research, Inc.
- Paola Manzini & Marco Mariotti, 2004. "Rationalizing Boundedly Rational Choice," Microeconomics 0407005, EconWPA, revised 21 Jul 2005.
- Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Wiley Blackwell, vol. 38(115), pages 307-17, July.
- Rubinstein, Ariel & Salant, Yuval, 2006. "A model of choice from lists," Theoretical Economics, Econometric Society, vol. 1(1), pages 3-17, March.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.