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Welfare criteria from choice: the sequential solution

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  • HORAN, Sean
  • SPRUMONT, Yves

Abstract

We study the problem of deriving a complete welfare ordering from a choice function. Under the sequential solution, the best alternative is the alternative chosen from the universal set; the second best is the one chosen when the best alternative is removed; and so on. We show that this is the only completion of Bernheim and Rangel's (2009) welfare relation that satisfies two natural axioms: neutrality, which ensures that the names of the alternatives are welfare-irrelevant; and persistence, which stipulates that every choice function between two welfare-identical choice functions must exhibit the same welfare ordering.

Suggested Citation

  • HORAN, Sean & SPRUMONT, Yves, 2015. "Welfare criteria from choice: the sequential solution," Cahiers de recherche 2015-01, Universite de Montreal, Departement de sciences economiques.
    • Handle: RePEc:mtl:montde:2015-01
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    File URL: http://hdl.handle.net/1866/11346
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    References listed on IDEAS

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    1. B. Douglas Bernheim, 2009. "Behavioral Welfare Economics," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 267-319, 04-05.
    2. Ariel Rubinstein & Yuval Salant, 2012. "Eliciting Welfare Preferences from Behavioural Data Sets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(1), pages 375-387.
    3. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 51-104.
    4. Can, Burak & Storcken, Ton, 2013. "Update monotone preference rules," Mathematical Social Sciences, Elsevier, vol. 65(2), pages 136-149.
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    More about this item

    Keywords

    Choice-based welfare analysis; bounded rationality;

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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