Characterizing Behavioral Decisions with Choice Datas

Patricio Dalton () and Sayantan Ghosal

No 2013-86, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: A number of different models with behavioral economics have a reduced form representation where potentially boundedly rational decision-makers do not necessarily internalize all the consequences of their actions on payoff relevant features (which we label as psychological states) of the choice environment. This paper studies the restrictions that such behavioral models impose on choice data and the implications they have for welfare analysis. First, we propose a welfare benchmark that is justified using standard axioms of rational choice and can be applied to a number of existing seminal behavioral economics models. Second, we show that Sen's axioms and fully characterize choice data consistent with behavioral decision-makers. Third, we show how choice data to infer information about the normative signi.cance of psychological states and establish the possibility of identifying welfare dominated choices.

Keywords: Behavioral Choices; Revealed and Normative Preferences; Individual Welfare; Axiomatic Characterization (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cbe, nep-cdm and nep-upt
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Related works:
Working Paper: Characterizing Behavioral Decisions with Choice Data (2013)
Working Paper: Characterizing behavioral decisions with choice data (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:sirdps:503

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