Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics

S-Tier
Journal: Quarterly Journal of Economics
Year: 2009
Volume: 124
Issue: 1
Pages: 51-104

Authors (2)

B. Douglas Bernheim (Stanford University) Antonio Rangel (not in RePEc)

Score contribution per author:

4.022 = (α=2.01 / 2 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We propose a broad generalization of standard choice-theoretic welfare economics that encompasses a wide variety of nonstandard behavioral models. Our approach exploits the coherent aspects of choice that those positive models typically attempt to capture. It replaces the standard revealed preference relation with an unambiguous choice relation: roughly, x is (strictly) unambiguously chosen over y (written xP*y) iff y is never chosen when x is available. Under weak assumptions, P* is acyclic and therefore suitable for welfare analysis; it is also the most discerning welfare criterion that never overrules choice. The resulting framework generates natural counterparts for the standard tools of applied welfare economics and is easily applied in the context of specific behavioral theories, with novel implications. Though not universally discerning, it lends itself to principled refinements.

Technical Details

RePEc Handle
repec:oup:qjecon:v:124:y:2009:i:1:p:51-104.
Journal Field
General
Author Count
2
Added to Database
2026-01-24