A measure of rationality and welfare

Jose Apesteguia and Miguel Ballester

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: 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.

Keywords: Rationality; Individual Welfare; Revealed Preference. (search for similar items in EconPapers)
JEL-codes: D01 D60 (search for similar items in EconPapers)
Date: 2010-05, Revised 2014-10
New Economics Papers: this item is included in nep-hap and nep-upt
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: A Measure of Rationality and Welfare (2015)
Working Paper: A Measure of Rationality and Welfare (2015)
Working Paper: A Measure of Rationality and Welfare (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1220

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