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A MEASURE OF RATIONALITY AND WELFARE (2012)
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by
Jose Apesteguia
,
Miguel A. Ballester
| Citations: | 4 - 0 self |
BibTeX
@MISC{Apesteguia12ameasure,
author = {Jose Apesteguia and Miguel A. Ballester},
title = {A MEASURE OF RATIONALITY AND WELFARE },
year = {2012}
}
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Abstract
There is evidence showing that individual behavior often deviates from the classical principle of maximization. This evidence raises at least two important questions: (i) how severe the deviations are, and (ii) which method is the best for extracting relevant information from choice behavior for the purposes of welfare analysis. In this paper we address these two questions by proposing an instrument that identifies the closest preference relation to the revealed choices and evaluates the inconsistencies by its associated welfare loss. We call this measure the swaps index.
