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The swaps index for consumer choice

Author

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  • Mia Lu
  • Nick Netzer

Abstract

We extend the swaps index of rationality, introduced by Apesteguia and Ballester (2015) for a finite set of alternatives, to the standard consumer choice setting with infinite commodity spaces. Applications include consumer demand from competitive budget sets and the state-space approach to choice under uncertainty. We are interested in Apesteguia and Ballester’s result that the swaps index recovers the decision-maker’s true preference from choice data for a large class of boundedly rational behavioral models. We show that this result still holds in the consumer choice setting under a suitably defined monotonicity condition. This condition is satisfied for various models of interest but violated for others.

Suggested Citation

  • Mia Lu & Nick Netzer, 2022. "The swaps index for consumer choice," ECON - Working Papers 418, Department of Economics - University of Zurich, revised May 2023.
    • Handle: RePEc:zur:econwp:418
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    File URL: https://www.zora.uzh.ch/id/eprint/220550/7/econwp418.pdf
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    References listed on IDEAS

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    3. Carlos Alós-Ferrer & Ernst Fehr & Nick Netzer, 2021. "Time Will Tell: Recovering Preferences When Choices Are Noisy," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1828-1877.
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    Cited by:

    1. Lasse Mononen, 2023. "Computing and comparing measures of rationality," ECON - Working Papers 437, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    Measures of rationality; revealed preference; behavioral welfare economics;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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