IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Characterizing behavioral decisions with choice data

  • Patricio S. Dalton
  • Sayantan Ghosal

A number of different models with behavioral economics have a reduced form rep- resentation where potentially boundedly rational decision-makers do not necessarily in- ternalize all the consequences of their actions on payo¤ relevant features (which we label as psychological states) of the choice environment. This paper studies the restrictions that such behavioral models impose on choice data and the implications they have for welfare analysis. First, we propose a welfare benchmark that is justi ed using standard axioms of rational choice and can be applied to a number of existing seminal behavioral economics models. Second, we show that Sen’s axioms and fully characterize choice data consistent with behavioral decision-makers. Third, we show how choice data to infer information about the normative signi cance of psychological states and establish the possibility of identifying welfare dominated choices.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.gla.ac.uk/media/media_296225_en.pdf
Download Restriction: no

Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2013_22.

as
in new window

Length:
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:gla:glaewp:2013_22
Contact details of provider: Postal:
Adam Smith Building, Glasgow G12 8RT

Phone: 0141 330 4618
Fax: 0141 330 4940
Web page: http://www.gla.ac.uk/schools/business/research/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Shafer, Wayne & Sonnenschein, Hugo, 1975. "Equilibrium in abstract economies without ordered preferences," Journal of Mathematical Economics, Elsevier, vol. 2(3), pages 345-348, December.
  2. Masatlioglu, Yusufcan & Ok, Efe A., 2005. "Rational choice with status quo bias," Journal of Economic Theory, Elsevier, vol. 121(1), pages 1-29, March.
  3. Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-19, June.
  4. Ghosal, Sayantan, 2011. "Complementarity with complete but P-acyclic preferences," Mathematical Social Sciences, Elsevier, vol. 62(2), pages 120-122, September.
  5. von Weizsacker, Carl Christian, 1971. "Notes on endogenous change of tastes," Journal of Economic Theory, Elsevier, vol. 3(4), pages 345-372, December.
  6. Laibson, David I., 1997. "Golden Eggs and Hyperbolic Discounting," Scholarly Articles 4481499, Harvard University Department of Economics.
  7. Charness, Gary B & Rabin, Matthew, 2001. "Understanding Social Preferences With Simple Tests," University of California at Santa Barbara, Economics Working Paper Series qt0dc3k4m5, Department of Economics, UC Santa Barbara.
  8. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
  9. Dalton, Patricio S; Ghosal, Sayantan; Mani, Anandi, 2010. "Poverty and Aspirations Failure," CAGE Online Working Paper Series 22, Competitive Advantage in the Global Economy (CAGE).
  10. Beshears, John Leonard & Choi, James J. & Laibson, David I. & Madrian, Brigitte, 2008. "How Are Preferences Revealed?," Scholarly Articles 11130523, Harvard University Department of Economics.
  11. Heifetz Aviad & Minelli Enrico, 2015. "Aspiration Traps," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 125-142, July.
  12. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
  13. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1133-1165.
  14. Bergstrom, Theodore C., 1975. "Maximal elements of acyclic relations on compact sets," Journal of Economic Theory, Elsevier, vol. 10(3), pages 403-404, June.
  15. Jonathan Shalev, 1997. "Loss Aversion Equilibrium," Game Theory and Information 9703001, EconWPA, revised 11 Mar 1997.
  16. Dalton, Patricio; Ghosal, Sayantan, 2010. "Behavioural Decisions and Welfare," CAGE Online Working Paper Series 06, Competitive Advantage in the Global Economy (CAGE).
  17. Xavier Gabaix & David Laibson, 2005. "Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets," NBER Working Papers 11755, National Bureau of Economic Research, Inc.
  18. Richard J. Herrnstein & Drazen Prelec, 1991. "Melioration: A Theory of Distributed Choice," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 137-156, Summer.
  19. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1039-1061.
  20. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
  21. Juan D. Carrillo & Thomas Mariotti, 2000. "Strategic Ignorance as a Self-Disciplining Device," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 529-544.
  22. 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.
  23. Attila Ambrus & Kareen Rozen, 2012. "Rationalizing Choice with Multi-Self Models," Working Papers 12-11, Duke University, Department of Economics.
  24. Hammond, Peter J., 1976. "Endogenous tastes and stable long-run choice," Journal of Economic Theory, Elsevier, vol. 13(2), pages 329-340, October.
  25. Douglas Bernheim & Antonio Rangel, 2007. "Beyond Revealed Preference Choice Theoretic Foundations for Behavioral Welfare Economics," Discussion Papers 07-031, Stanford Institute for Economic Policy Research.
  26. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
  27. O'Donoghue, Ted & Rabin, Matthew, 2006. "Optimal sin taxes," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1825-1849, November.
  28. Loewenstein, George & Ubel, Peter A., 2008. "Hedonic adaptation and the role of decision and experience utility in public policy," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1795-1810, August.
  29. Jose Apesteguia and Miguel Angel Ballester, 2010. "A Measure of Rationality and Welfare," Working Papers 467, Barcelona Graduate School of Economics.
  30. Yusufcan Masatlioglu & Daisuke Nakajima & Erkut Ozbay, 2009. "Revealed Attention," NajEcon Working Paper Reviews 814577000000000409, www.najecon.org.
  31. Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, vol. 50(2), pages 255-277, February.
  32. Botond Kőszegi, 2010. "Utility from anticipation and personal equilibrium," Economic Theory, Springer, vol. 44(3), pages 415-444, September.
  33. Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory and Anticipatory Feelings," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 55-79.
  34. Paola Manzini & Marco Mariotti, 2007. "Sequentially Rationalizable Choice," American Economic Review, American Economic Association, vol. 97(5), pages 1824-1839, December.
  35. Paola Manzini & Marco Mariotti, 2012. "Categorize Then Choose: Boundedly Rational Choice And Welfare," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1141-1165, October.
  36. Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 307-317.
  37. Bezalel Peleg & Menahem E. Yaari, 1973. "On the Existence of a Consistent Course of Action when Tastes are Changing," Review of Economic Studies, Oxford University Press, vol. 40(3), pages 391-401.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:gla:glaewp:2013_22. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jeanette Findlay)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.