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Non-Choice Evaluations Predict Behavioral Responses to Changes in Economic Conditions

  • B. Douglas Bernheim
  • Daniel Bjorkegren
  • Jeffrey Naecker
  • Antonio Rangel

A central task in microeconomics is to predict choices in as-yet-unobserved situations (e.g., after some policy intervention). Standard approaches can prove problematic when sufficiently similar changes have not been observed or do not have observable exogenous causes. We explore an alternative approach that generates predictions based on relationships across decision problems between actual choice frequencies and non-choice subjective evaluations of the available options. In a laboratory experiment, we find that this method yields accurate estimates of price sensitivities for a collection of products under conditions that render standard methods either inapplicable or highly inaccurate.

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File URL: http://www.nber.org/papers/w19269.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19269.

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Date of creation: Aug 2013
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Handle: RePEc:nbr:nberwo:19269
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