Characterizing behavioral decisions with choice data

Patricio Dalton () and Sayantan Ghosal

Working Papers from Business School - Economics, University of Glasgow

Abstract: A number of different models with behavioral economics have a reduced form rep- resentation where potentially boundedly rational decision-makers do not necessarily in- ternalize all the consequences of their actions on payo¤ 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 justi ed 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)
JEL-codes: D03 D60 I30 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-cbe, nep-cdm and nep-mic
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Related works:
Working Paper: Characterizing Behavioral Decisions with Choice Data (2013)
Working Paper: Characterizing Behavioral Decisions with Choice Datas (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2013_22

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