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Choice and Welfare under Social Constraints

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  • Mauricio Ribeiro

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

  • Mauricio Ribeiro, 2025. "Choice and Welfare under Social Constraints," Bristol Economics Discussion Papers 25/809, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:25/809
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