The swaps index for consumer choice

Mia Lu and Nick Netzer

No 418, ECON - Working Papers from Department of Economics - University of Zurich

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.

Keywords: Measures of rationality; revealed preference; behavioral welfare economics (search for similar items in EconPapers)
JEL-codes: D01 D11 D60 D90 (search for similar items in EconPapers)
Date: 2022-08, Revised 2023-05
New Economics Papers: this item is included in nep-dcm, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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