Revealed Preferences, Choices, and Psychological Indexes

This paper develops a model of choice that embeds some psychological aspects affecting decision maker's behaviour. In the model, the decision maker attaches an unobservable psychological index -representing, e.g., the level of perceived availability or the level of salience- to each alternative in a universal collection. Choice behaviour of the decision maker is then conditioned by the indexes attached to the alternatives. With this paper we show that, if the conditional choice behaviour satisfies two intuitively appealing properties -namely Monotonicity and Conditional IIA- then the observable part of the choice behaviour, i.e., the unconditional choices, can be interpreted as the product of the maximization of a preference relation. The paper discusses also some welfare consideration regarding the choice model and finally some interpretations of the indexes are provided.Revealed preferences, Choice with frame, Salience, Scarcity bias, Bandwagon effect, Snob effect

Monotonicity of Social Optima With Respect to Participation Constraints.

In this paper we consider solutions which select from the core. For games with side payments with at least four players, it is well-known that no core-selection satifies monotonicity for all coalitions; for the particular class of core-selections found by maximizing a social welfare function over the core, we investigate whether such solutions are monotone for a given coalition. It is shown that if this is the case then the solution actually maximizes aggregate coalition payoff on the core. Furthermore, the social welfare function to be maximized exhibits larger marginal social welfare with respect to the payoff of any member of the coalition. The results may be used to show that there are no monotonic core selection rules of this type in the context of games without side payments.coalitional games; monotonicity; core; social welfare

The distribution of oportunities: a normative theory

In this paper, we consider the problem of ranking protiles of opportunity sets. First, we take each agent's preferences over (individual) opportunity sets as given. Then, rather than discriminate among possibly competing evaluative criteria, we consider minimal standards for any such ranking. We impose four normative principies, in each case limiting the conditions under which ethical conclusions might be drawn to only those cases that are unambiguous. The first three principles are subrestrictions of the Pareto criterion; they require that Pareto improvements unambiguously enhance social welfare only when they do not conflict with other social objectives. The fourth principle is a minimal equity condition. It requires that if an agent can be identified as being the worst-off, then a necessary condition for social welfare to unambiguously increase when sorne agents gain is that this agent gains as well, however slightly. We then study the properties of social optima under these restrictions. We show that while optima need not be Pareto efficient, they must be envy-free. Thus, accepting these principies requires commitment to a world in which no agent envies the opportunities available to another

Justifiability of Bayesian Implementation in Oligopolistic Markets

We show that in oligopolistic markets the social choice correspondence which selects all socially efficient outcomes is Nash implementable if the number of firms is at least two. Thus, monopoly regulation whenever consumers are favored by the designer or the society is the only framework, among all oligopolistic regulatory models, where Bayesian approach is indispensable.Bayesian Implementation; Nash Implementation; Asymmetric Information; Oligopoly; Regulation

Strategy-proof preference rules

By virtue of the Kemeny distance strategy-proofness of preference rules is defined. It is shown that a preference rule, which assigns a complete relation to every profile of complete relations is non-imposed and strategy-proof if and only if it is pairwise voting in committees. So, non-imposedness and strategy-proofness together imply the independence of irrelevant alternatives condition. Furthermore, it is shown that in this setting pairwise voting in committees coincides with coordinatewise veto voting. Taking acyclic preference rules into consideration, which assign an acyclic complete relation to every profile of acyclic complete relations, it follows that under strategy-proofness and non-imposition the independence of irrelevant alternatives is equivalent to indifference monotonicity. Now it follows that an acyclic preference rule is non-imposed, strategy-proof and indifference monotonic if and only if it is coordinatewise veto voting with respect to a cycle free assignment of disagreements.mathematical economics and econometrics ;

Beyond Revealed Preference Choice Theoretic Foundations for Behavioral Welfare Economics

This paper proposes a choice-theoretic framework for evaluating economic welfare with the following features. (1) It is applicable irrespective of the positive model used to describe behavior. (2) It subsumes standard welfare economics both as a special case (when standard choice axioms are satisfied) and as a limiting case (when behavioral anomalies are small). (3) It requires only data on choices. (4) It is easily applied in the context of specific behavioral theories, such as the ß, d model of time inconsistency, for which it has novel normative implications. (5) It generates natural counterparts for the standard tools of applied welfare analysis, including compensating and equivalent variation, consumer surplus, Pareto optimality, and the contract curve, and permits a broad generalization of the first welfare theorem. (6) Though not universally discerning, it lends itself to principled refinements.Economic Welware, behavior economics, welfare analysis, consumer surplus, Pareto optimality

The distribution of oportunities: a normative theory.

In this paper, we consider the problem of ranking protiles of opportunity sets. First, we take each agent's preferences over (individual) opportunity sets as given. Then, rather than discriminate among possibly competing evaluative criteria, we consider minimal standards for any such ranking. We impose four normative principies, in each case limiting the conditions under which ethical conclusions might be drawn to only those cases that are unambiguous. The first three principles are subrestrictions of the Pareto criterion; they require that Pareto improvements unambiguously enhance social welfare only when they do not conflict with other social objectives. The fourth principle is a minimal equity condition. It requires that if an agent can be identified as being the worst-off, then a necessary condition for social welfare to unambiguously increase when sorne agents gain is that this agent gains as well, however slightly. We then study the properties of social optima under these restrictions. We show that while optima need not be Pareto efficient, they must be envy-free. Thus, accepting these principies requires commitment to a world in which no agent envies the opportunities available to another.

Pareto-Optimal Matching Allocation Mechanisms for Boundedly Rational Agents

This article is concerned with the welfare properties of trade when the behavior of agents cannot be rationalized by preferences. I investigate this question in an environment of matching allocation problems. There are two reasons for doing so: rstly, the niteness of such problems entails that the domain of the agents' choice behavior does not need to be restricted in any which way to obtain results on the welfare properties of trade. Secondly, some matching allocation mechanisms have been designed for non-market environments in which we would typically expect boundedly rational behavior. I nd qualied support for the statements that all outcomes of trade are Pareto-optimal and all Pareto optima are reachable through trade. Contrary to the standard case, dierent trading mechanisms lead to dierent outcome sets when the agents' behavior is not rationalizable. These results remain valid when restricting attention to \minimally irrational" behavior.Bounded Rationality, House Allocation Problems, Fundamental Theorems of Welfare, Multiple Rationales