119525.pdf - Accepted Version
Restricted to Repository staff only until 6 August 2018.
This paper incorporates self-fulfilling 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 α and γ fully characterize choice data consistent with behavioral agents. These two axioms are weaker than Sen’s axioms α and β that fully characterize rational agents. We offer 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.
|Status:||Early Online Publication|
|Glasgow Author(s) Enlighten ID:||Ghosal, Professor Sayantan|
|Authors:||Dalton, P. S., and Ghosal, S.|
|College/School:||College of Social Sciences > Adam Smith Business School > Economics|
|Journal Name:||Economic Journal|
|Published Online:||06 August 2016|