A Measure of Rationality and Welfare
Evidence showing that individual behavior often deviates from the classical principle of preference maximization has raised at least two important questions: (i) How serious are the deviations? and (ii) What is the best way to analyse choice behavior in order to extract information for the purpose of welfare analysis? This paper addresses these questions by proposing a new way to identify the preference relation which is closest, in terms of welfare loss, to the revealed choice.
|Date of creation:||Oct 2014|
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- 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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CeMMAP working papers
CWP17/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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"Beyond Revealed Preference: Choice Theoretic Foundations for Behavioral Welfare Economics,"
NBER Working Papers
13737, National Bureau of Economic Research, Inc.
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- B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 51-104.
- Jose Apesteguia & Miguel A. Ballester & Rosa Ferrer, 2011. "On the Justice of Decision Rules," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 1-16.
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