Dalton, Patricio S. and Ghosal, Sayantan (2009) Behavioral decisions and welfare. In: Invited Speaker : Queen Mary College, London, 18 May 2009 (Unpublished)
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Abstract
What are the normative implications of behavioral economics? We study a model where the decisions a person makes, consciously or unconsciously, a¤ect her psychological state (reference point, beliefs, expectations, self-image) which, in turn, impacts on her ranking over available decisions in the �rst place. We distinguish between standard decisions where the decision-maker internalizes the feedback from her actions to her psychological state, and behavioral decisions where the psychological state is taken as given (although a decision outcome requires that action and psychological state are mutually consistent). In a behavioral decision, the individual imposes an externality on herself. We provide an axiomatic characterization of behavioral decisions. We show that the testable implications of behavioral and standard decisions are di¤erent and the outcomes of the two decision problems are, typically, distinguishable. We discuss the consequences for public policy of our formal analysis and o¤er normative grounds for subsidized psychological therapies.
| Item Type: | Conference Item (Paper) |
|---|---|
| Subjects: | H Social Sciences > HM Sociology |
| Divisions: | Faculty of Social Sciences > Economics |
| Official Date: | 18 May 2009 |
| Dates: | Date Event 18 May 2009 Completion |
| Status: | Not Peer Reviewed |
| Publication Status: | Unpublished |
| Funder: | EST Marie Curie Fellowship, Royal Economic Society Junior Fellowship, Warwick Economics Department, ESRC-DFID |
| Grant number: | RES-167-25-0364 |
| Version or Related Resource: | Dalton, Patricio S. and Ghosal, Sayantan (2009). Behavioral decisions and welfare. In: Invited : Singapore Management University. Singapore, 4 Aug 2010. |
| Conference Paper Type: | Paper |
| Title of Event: | Invited Speaker : Queen Mary College |
| Type of Event: | Other |
| Location of Event: | London |
| Date(s) of Event: | 18 May 2009 |
| Related URLs: | |
| URI: | https://wrap.warwick.ac.uk/45752/ |
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