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.
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1286, California Institute of Technology, Division of the Humanities and Social Sciences.
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NBER Working Papers
13737, National Bureau of Economic Research, Inc.
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CeMMAP working papers
CWP17/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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- 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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