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Who Is (More) Rational?

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Abstract

Revealed preference theory o¤ers a criterion for decision-making quality: if decisions are high quality then there exists a utility function that the choices maximize. We conduct a large-scale ?eld experiment that enables us to test subjects?choices for consistency with utility maximization and to combine the experimental data with a wide range of individual socioeco-nomic information for the subjects. There is considerable heterogeneity in subjects?consistency scores: high-income and high-education subjects display greater levels of consistency than low- income and low-education subjects, men are more consistent than women, and young subjects are more consistent than older subjects. We also ?nd that consistency with utility maximization is strongly related to wealth: a standard deviation increase in the consistency score is associated with 15-19 percent more wealth. This result conditions on socioeconomic variables including current income, education, and family structure, and is little changed when we add controls for past income, risk tolerance and the results of a standard personality test used by psychologists.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1105.

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Date of creation: Jan 2011
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Handle: RePEc:vie:viennp:1105

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Web page: http://www.univie.ac.at/vwl

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  1. Casper Ewijk & Bas Jacobs & Ruud Mooij, 2007. "Welfare Effects of Fiscal Subsidies on Home Ownership in the Netherlands," De Economist, Springer, vol. 155(3), pages 323-336, September.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Who Is Consistent?
    by Robin Hanson in Overcoming Bias on 2011-06-28 17:50:30
  2. Who is rational?
    by Economic Logician in Economic Logic on 2011-03-31 14:34:00
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Cited by:
  1. Vieider, Ferdinand M. & Lefebvre, Mathieu & Bouchouicha, Ranoua & Chmura, Thorsten & Hakimov, Rustamdjan & Krawczyk, Michal & Martinsson, Peter, 2013. "Common components of risk and uncertainty attitudes across contexts and domains: Evidence from 30 countries," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-402, Social Science Research Center Berlin (WZB).
  2. Sákovics, József, 2012. "Revealed cardinal preference," SIRE Discussion Papers 2012-02, Scottish Institute for Research in Economics (SIRE).
  3. Jose Apesteguia & Miguel Angel Ballester, 2012. "Choice By Sequential Procedures," Working Papers 615, Barcelona Graduate School of Economics.
  4. Vieider, Ferdinand M. & Truong, Nghi & Martinsson, Peter & Pham Khanh Nam & Martinsson, Peter, 2013. "Risk preferences and development revisited: A field experiment in Vietnam," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-403, Social Science Research Center Berlin (WZB).
  5. Cappelen, Alexander W. & Kariv, Shachar & Sørensen, Erik Ø. & Tungodden, Bertil, 2014. "Is There a Development Gap in Rationality?," Discussion Paper Series in Economics 8/2014, Department of Economics, Norwegian School of Economics.
  6. Faravelli, Marco & Sanchez-Pages, Santiago, 2012. "(Don’t) Make My Vote Count," SIRE Discussion Papers 2012-07, Scottish Institute for Research in Economics (SIRE).
    • Santiago Sanchez-Pages (University of Edinburgh) & Marco Faravelli (School of Economics, University of Queensland, Australia), 2012. "(Don't) Make My Vote Count," ESE Discussion Papers 213, Edinburgh School of Economics, University of Edinburgh.
  7. Halevy, Yoram, 2012. "Parametric Recoverability of Preferences," Microeconomics.ca working papers yoram_halevy-2012-20, Vancouver School of Economics, revised 07 Apr 2014.
  8. Mark Dean & Daniel Martin, 2011. "Testing for Rationality with Consumption Data: Demographics and Heterogeneity," Working Papers 2011-11, Brown University, Department of Economics.
  9. Andrew Leicester & Peter Levell, 2013. "Anti-smoking policies and smoker well-being: evidence from Britain," IFS Working Papers W13/13, Institute for Fiscal Studies.
  10. Johannes Spinnewijn, 2012. "Heterogeneity, Demand for Insurance and Adverse Selection," CEP Discussion Papers dp1142, Centre for Economic Performance, LSE.
  11. Raymond Fisman & Pamela Jakiela & Shachar Kariv, 2014. "The Distributional Preferences of Americans," NBER Working Papers 20145, National Bureau of Economic Research, Inc.
  12. Ariel Rubenstein, 2013. "Response time and decision making: An experimental study," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 8(5), pages 540-551, September.
  13. Yang, Xiaojun & Carlsson, Fredrik, 2012. "Intra-household decisions making on intertemporal choices: An experimental study in rural China," Working Papers in Economics 537, University of Gothenburg, Department of Economics.
  14. Jakiela, Pamela & Ozier, Owen, 2012. "Does Africa need a rotten Kin Theorem ? experimental evidence from village economies," Policy Research Working Paper Series 6085, The World Bank.
  15. Hans-Martin Gaudecker & Arthur Soest & Erik Wengström, 2012. "Experts in experiments," Journal of Risk and Uncertainty, Springer, vol. 45(2), pages 159-190, October.

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