Self-fulfilling mistakes: Characterization and welfare

Patricio Dalton, Sayantan Ghosal

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

This paper incorporates self-fullling mistakes into an otherwise classical decision-making framework. A behavioural agent makes a mistake when he fails to internalize all the consequences of his actions on himself. We show that Sen's axioms and fully characterize choice data consistent with behavioral agents. These two axioms are weaker than Sen's axioms and that fully characterize rational agents. We oer a welfare benchmark that can be applied to existing behavioural economics models and show the conditions under which our welfare ranking can be
used to infer welfare dominated (i.e. mistaken) choices using choice data alone.
Original languageEnglish
Pages (from-to)683-709
JournalThe Economic Journal
Volume128
Issue number609
DOIs
Publication statusPublished - Mar 2018

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Axioms
Benchmark
Ranking
Decision making

Keywords

  • Behavioural Welfare Economics
  • Revealed and Normative Preferences
  • Individual Welfare
  • Axiomatic characterization

Cite this

Dalton, Patricio ; Ghosal, Sayantan. / Self-fulfilling mistakes : Characterization and welfare. In: The Economic Journal. 2018 ; Vol. 128, No. 609. pp. 683-709.
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Self-fulfilling mistakes : Characterization and welfare. / Dalton, Patricio; Ghosal, Sayantan.

In: The Economic Journal, Vol. 128, No. 609, 03.2018, p. 683-709.

Research output: Contribution to journalArticleScientificpeer-review

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