Behavioural welfare analysis and revealed preference: theory and experimental evidence

Daniele Caliari

EconStor Open Access Articles and Book Chapters, 2026, issue Online first articles

Abstract: Eliciting preferences from decision-makers who are not utility maximizers implies an intrinsic trade-off between obtaining a coarse preference and an incorrect one (false-positive). Some current tools minimize false positives but become coarser and coarser as the dataset grows. We propose an informational property [Informational Responsiveness] that limits the coarseness problem and, as the dataset grows, characterizes a family of tools that can successfully elicit the underlying preference from a broad set of models. Through a novel experiment, we show that these tools substantially reduce the coarseness of the elicited preference while only marginally increasing false positives. In fact, if the researcher is forced to resolve the uncertainty given by the coarseness of the elicited preference, we show that our proposal leads to a substantial reduction in the expected number of false positives.

Keywords: Behavioural welfare economics; Bounded rationality; Stochastic choice; Revealed preference (search for similar items in EconPapers)
JEL-codes: D00 D6 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:344479

DOI: 10.1007/s11238-026-10164-1

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