Behavioral decisions and welfare
Dalton, Patricio S. and Ghosal, Sayantan (2009) Behavioral decisions and welfare. In: Invited Speaker : Queen Mary College, London, 18 May 2009 (Unpublished)Full text not available from this repository.
Official URL: http://www.econ.qmul.ac.uk/events/seminars/2010/06...
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|
|Status:||Not Peer Reviewed|
|Funder:||EST Marie Curie Fellowship, Royal Economic Society Junior Fellowship, Warwick Economics Department, ESRC-DFID|
|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|
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