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Choice and welfare under social constraints

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  • Ribeiro, Mauricio

Abstract

Economists often rely on people’ s choices to infer their preferences. However, inferring preferences from choices becomes problematic when people face unobserved constraints. In this paper, I study how to (cautiously) infer preferences from choices when the choices of the members of a social group are subject to a constraint that we only imperfectly know. When this happens, heterogeneity in the group’ s choices, along with more information about the constraint, helps recover the preferences of group members, whereas homogeneity in choices hinders it. I further argue that standard approaches to choice-based welfare analysis can lead to misleading inferences about welfare when there are unobserved social constraints.

Suggested Citation

  • Ribeiro, Mauricio, 2026. "Choice and welfare under social constraints," Games and Economic Behavior, Elsevier, vol. 156(C), pages 1-13.
    • Handle: RePEc:eee:gamebe:v:156:y:2026:i:c:p:1-13
    DOI: 10.1016/j.geb.2025.11.010
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    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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