This paper constructs a simple model to illustrate that the current food stamp subsidy scheme fails to achieve its aim due to the crowding-out effect. In particular, if the household income is sufficiently low, only the corner solution exists and full subsidy is needed. The optimal food stamp subsidy scheme is identified and the subsidy efficiency rate is introduced to measure the impact on foo...

Focusing theory hypothesizes a bias toward concentration according to which consumers prefer goods with one outstanding feature over those with several smaller sized upsides. In contrast to models of present-biased behavior, focusing theory prescribes also future-biased behavior if an option’s future reward is particularly outstanding. Our laboratory experiment yields substantial support for th...

Economists typically object to preference-based explanations of human behavior; differences in preferences “explain everything and therefore nothing”. But this argument is only correct assuming that no empirical evidence exists to discipline preference-based explanations. In fact, over the past decade, personality psychologists have produced a robust collection of stylized facts about human pre...

Advertising messages compete for scarce attention. “Junk” mail, “spam” e-mail, and telemarketing calls need both parties to exert effort to generate transactions. Message recipients supply attention depending on average message beneÞt. Senders are motivated by proÞts. Costlier message transmission may improve message quality so more messages are examined. Too many messages may be sent, or the w...

Let X be a compact, or path-connected, metric space whose topological dimension is at least 2. We show that there does not exist a continuous choice function (i.e., single-valued choice correspondence) defined on the collection of all finite feasible sets in X. Not to be void of content, therefore, a revealed preference theory in the context of most infinite consumption spaces must either relin...

In the measurement of inequality, adjustments for differences across households in their demographic composition and in the price regimes they face are usually very simple. Often, nominal expenditure (or income) is adjusted with an expenditure-independent price deflator and a price-independent equivalence scale. I show that using more flexible expendituredependent price deflators and price-depe...

This paper reports a study on the socio-economic determinants of completed fertility in Mexico. An innovative Poisson Double-Hurdle count model is developed for the analysis. This methodological approach allows low and high order parities to be determined by two different data generating mechanisms, and explicitly accounts for potential endogenous switching between regimes. Unobserved heterogen...

A theory of decision making is proposed that offers an axiomatic basis for the notion of “satisficing” postulated by Herbert Simon. The theory relaxes the standard assumption that the decision maker always fully perceives his preferences among the available alternatives, requiring instead that his ability to perceive any given preference be decreasing with respect to the complexity of the choic...

Motivated by the empirical findings concerning the importance of one’s current situation on her choice behavior, the main objective of this paper is to propose a rational choice theory that allows for the presence of a status quo bias, and that incorporates the standard choice theory as a special case. We follow a revealed preference approach, and obtain two nested models of rational choice tha...

We characterize the optimal dynamic price policy of a monopolist who faces “viscous” demand for its services. Demand is viscous if it adjusts relatively slowly to price changes. We show that with the optimal policy the monopolist stops short of achieving 100% market penetration, even when all of the consumers have the same long-run willingness to pay for the service. Furthermore, for certain pa...