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Semi-Parametric Approach to Behavioral Biases

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Abstract

This paper shows how to recover behavioral biases from revealed preference ranking implied by choices. The approach formalizes and unifies well-known behavioral models, including salience thinking, inattention, and logarithmic perception, thereby accounting for many well-documented choice puzzles. I show that this approach provides a way to filter out choice data from behavioral biases explaining rationality breaches before fitting parametric utility models. The approach is applied to workhorse data sets of the literature on choice under risk and scanner consumer choices.

Suggested Citation

  • Avner Seror, 2024. "Semi-Parametric Approach to Behavioral Biases," AMSE Working Papers 2401, Aix-Marseille School of Economics, France.
    • Handle: RePEc:aim:wpaimx:2401
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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