Welfare Criteria from Choice: The Sequential Solution

Sean Horan and Yves Sprumont ()

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: We study the problem of deriving a complete welfare ordering from a choice function. Under the sequential solution, the best alternative is the alternative chosen from the universal set; the second best is the one chosen when the best alternative is removed; and so on. We show that this is the only completion of Bernheim and Rangel's (2009) welfare relation that satisfies two natural axioms: neutrality, which ensures that the names of the alternatives are welfare-irrelevant; and persistence, which stipulates that every choice function between two welfare-identical choice functions must exhibit the same welfare ordering.

Keywords: choice-based welfare analysis; bounded rationality (search for similar items in EconPapers)
JEL-codes: D01 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2015
New Economics Papers: this item is included in nep-mic
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Working Paper: Welfare criteria from choice: the sequential solution (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:01-2015

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