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Non-Choice Evaluations Predict Behavioral Responses to Changes in Economic Conditions

40 Pages Posted: 1 Aug 2013  

B. Douglas Bernheim

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Daniel Bjorkegren

Brown University

Jeffrey Naecker

Wesleyan University - Department of Economics

Antonio Rangel

California Institute of Technology

Date Written: August 2013

Abstract

A central task in microeconomics is to predict choices in as-yet-unobserved situations (e.g., after some policy intervention). Standard approaches can prove problematic when sufficiently similar changes have not been observed or do not have observable exogenous causes. We explore an alternative approach that generates predictions based on relationships across decision problems between actual choice frequencies and non-choice subjective evaluations of the available options. In a laboratory experiment, we find that this method yields accurate estimates of price sensitivities for a collection of products under conditions that render standard methods either inapplicable or highly inaccurate.

Suggested Citation

Bernheim, B. Douglas and Bjorkegren, Daniel and Naecker, Jeffrey and Rangel, Antonio, Non-Choice Evaluations Predict Behavioral Responses to Changes in Economic Conditions (August 2013). NBER Working Paper No. w19269. Available at SSRN: https://ssrn.com/abstract=2304695

B. Douglas Bernheim (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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Stanford, CA 94305-6072
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650-725-8732 (Phone)
650-725-5702 (Fax)

National Bureau of Economic Research (NBER)

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Daniel Bjorkegren

Brown University ( email )

64 Waterman Street
Providence, RI 02912
United States

HOME PAGE: http://dan.bjorkegren.com

Jeffrey Naecker

Wesleyan University - Department of Economics ( email )

238 Church Street
Middletown, CT 06459-0007
United States

Antonio Rangel

California Institute of Technology ( email )

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