Welfare analysis when choice is status-quo biased

Francois Maniquet and Hassan Nosratabadi

Journal of Mathematical Economics, 2022, vol. 102, issue C

Abstract: We provide a revealed preference analysis in models where choice may be status-quo biased. We study the relevant case in which data is limited and make reasonable assumptions on how status-quo may structure behavior. We show how to elicit true, welfare-relevant, preferences of a biased decision maker and argue that imposing more structure may significantly improve welfare analysis. We prove that a combination of two variants of the well-known strong-axiom of revealed preference characterizes status-quo biased behavior.

Keywords: Status-quo bias; Welfare analysis; Revealed preference; SARP (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:102:y:2022:i:c:s0304406822000623

DOI: 10.1016/j.jmateco.2022.102718

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