Consumer Theory with Misperceived Tastes

31 Pages Posted: 15 Aug 2018

See all articles by Geoffroy de Clippel

Geoffroy de Clippel

Brown University - Department of Economics

Kareen Rozen

Brown University - Department of Economics

Date Written: July 30, 2018

Abstract

Incorporating bounded rationality into the classic consumer theory setting, we study the testable implications of a consumer who may have trouble consistently assessing her subjective tastes. Our model of ε-Rationalizability, which bounds the consumer’s misperception of her marginal rates of substitution, may arise from various choice heuristics. It also offers a natural, preference-based measure of departure from rationality that is more demanding than Afriat’s measure.

Suggested Citation

de Clippel, Geoffrey and Rozen, Kareen, Consumer Theory with Misperceived Tastes (July 30, 2018). Available at SSRN: https://ssrn.com/abstract=3223654 or http://dx.doi.org/10.2139/ssrn.3223654

Geoffrey De Clippel

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Kareen Rozen (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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