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Revealed Preferences, Choices, and Psychological Indexes

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  • Ivan Soraperra

    (University of Trento)

Abstract

This paper develops a model of choice that embeds some psychological aspects affecting decision maker's behaviour. In the model, the decision maker attaches an unobservable psychological index -representing, e.g., the level of perceived availability or the level of salience- to each alternative in a universal collection. Choice behaviour of the decision maker is then conditioned by the indexes attached to the alternatives. With this paper we show that, if the conditional choice behaviour satisfies two intuitively appealing properties -namely Monotonicity and Conditional IIA- then the observable part of the choice behaviour, i.e., the unconditional choices, can be interpreted as the product of the maximization of a preference relation. The paper discusses also some welfare consideration regarding the choice model and finally some interpretations of the indexes are provided.

Suggested Citation

  • Ivan Soraperra, 2009. "Revealed Preferences, Choices, and Psychological Indexes," Working Papers 643, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:643
    as

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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2009/items/wp643.pdf
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    References listed on IDEAS

    as
    1. Green, Jerry & Hojman, Daniel, 2007. "Choice, Rationality and Welfare Measurement," Working Paper Series rwp07-054, Harvard University, John F. Kennedy School of Government.
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    5. B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
    6. Lynn, Michael, 1989. "Scarcity effects on desirability: Mediated by assumed expensiveness?," Journal of Economic Psychology, Elsevier, vol. 10(2), pages 257-274, June.
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    8. Luigi Mittone & Lucia Savadori & Rino Rumiati, 2005. "Does scarcity matter in children's behavior? A developmental perspective of the basic scarcity bias," CEEL Working Papers 0501, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Revealed preferences; Choice with frame; Salience; Scarcity bias; Bandwagon effect; Snob effect;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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