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Consumer Choice and Revealed Bounded Rationality

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  • Paola Manzini

    (Queen Mary, University of London and IZA)

  • Marco Mariotti

    (Queen Mary, University of London)

Abstract

We study two boundedly rational procedures in consumer behavior. We show that these procedures can be detected by conditions on observable demand data of the same type as standard revealed preference axioms. This provides the basis for a non-parametric analysis of boundedly rational consumer behavior mirroring the classical one for utility maximization.

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Bibliographic Info

Paper provided by Queen Mary, University of London, School of Economics and Finance in its series Working Papers with number 571.

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Date of creation: Sep 2006
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Handle: RePEc:qmw:qmwecw:wp571

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Keywords: Bounded rationality; Revealed preference; Consumer choice;

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References

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  1. Rajeev Kohli & Kamel Jedidi, 2007. "Representation and Inference of Lexicographic Preference Models and Their Variants," Marketing Science, INFORMS, vol. 26(3), pages 380-399, 05-06.
  2. W. Pesendorfer & F. Gul, 1999. "Self-Control and the Theory of Consumption," Princeton Economic Theory Papers 99f2, Economics Department, Princeton University.
  3. Ariel Rubinstein & Yuval Salant, 2007. "(A,f) Choice with Frames," Levine's Bibliography 843644000000000029, UCLA Department of Economics.
  4. Gil Kalai & Ariel Rubinstein & Ran Spiegler, 2002. "Rationalizing Choice Functions By Multiple Rationales," Econometrica, Econometric Society, vol. 70(6), pages 2481-2488, November.
  5. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
  6. Marco Mariotti, 2008. "What kind of preference maximization does the weak axiom of revealed preference characterize?," Economic Theory, Springer, vol. 35(2), pages 403-406, May.
  7. W. Pesendorfer & F. Gul, 1999. "Temptation and Self-Control," Princeton Economic Theory Papers 99f1, Economics Department, Princeton University.
  8. Michael Yee & Ely Dahan & John R. Hauser & James Orlin, 2007. "Greedoid-Based Noncompensatory Inference," Marketing Science, INFORMS, vol. 26(4), pages 532-549, 07-08.
  9. repec:bla:restud:v:74:y:2007:i:1:p:147-172 is not listed on IDEAS
  10. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  11. Faruk Gul & Wolfgang Pesendorfer, 2007. "Harmful Addiction," Review of Economic Studies, Oxford University Press, vol. 74(1), pages 147-172.
  12. Campbell, Donald E., 1986. "Revealed preference and demand correspondences," Journal of Economic Theory, Elsevier, vol. 38(2), pages 364-370, April.
  13. Clark, Stephen A, 1988. "An Extension Theorem for Rational Choice Functions," Review of Economic Studies, Wiley Blackwell, vol. 55(3), pages 485-92, July.
  14. Kim, Taesung & Richter, Marcel K., 1986. "Nontransitive-nontotal consumer theory," Journal of Economic Theory, Elsevier, vol. 38(2), pages 324-363, April.
  15. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
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Cited by:
  1. Kfir Eliaz & Michael Richter & Ariel Rubinstein, 2011. "Choosing the two finalists," Economic Theory, Springer, vol. 46(2), pages 211-219, February.
  2. Nakajima, Daisuke & Masatlioglu, Yusufcan, 2013. "Choice by iterative search," Theoretical Economics, Econometric Society, vol. 8(3), September.

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