We address the following question: When can one person properly be said to be more delay averse than another? In reply, several (nested) comparison methods are developed. These methods yield a theory of delay aversion which parallels that of risk aversion. The applied strength of this theory is demonstrated in a variety of dynamic economic settings, including the classical optimal growth and tr...

The logsum formula, which provides the expected maximum utility for the multinomial logit model, is often used as a measure of welfare. We provide here a closed form formula of the welfare measure of an individual who has not access to his first-best choice, but has access to his rth-best choice, r = 2, ...n, where n is the number of alternatives. The derivation is based on a standard identity ...

We reconsider the CES production functions, focusing on their additive separability properties and the constraints these impose on dual elasticites of gross substitution and complementarity. In particular, we offer some alternative characterizations of the (standard) homogeneous cases that seem to have gone unnoticed, as far as we know. We also start exploring the cases of the (additively separ...

The utilitarian aggregation rule requires social utility and beliefs to be a convex combination of individual utilities beliefs, respectively. Since, in the case belief heterogeneity, standard Pareto condition is incompatible with such separate aggregation, new condition, called belief-proof proposed alleviate occurrences spurious agreement by restricting unanimity that can considered reasonabl...

One of the most well-established empirical facts is that exposure to advertisements increases a consumers’ tendency to buy the promoted product. The standard interpretation of this empirical regularity is that advertising intensity is an element of the utility. Here we show that if consumers are risk-averse and advertising conveys information about product attributes, the empirical regularity c...

We develop a behavioral axiomatic characterization of Subjective Expected Utility (SEU) under risk aversion. Given is an individual agent’s behavior in the market: assume a finite collection of asset purchases with corresponding prices. We show that such behavior satisfies a “revealed preference axiom” if and only if there exists a SEU model (a subjective probability over states and a concave u...

We develop a behavioral axiomatic characterization of exponentially discounted utility (EDU) over consumption streams. Given is an individual agent’s behavior in the market: assume a finite collection of purchases across periods. We show that such behavior satisfies a “revealed preference axiom” if and only if there exists a EDU model (a discount rate per period and a concave utility function o...

We develop a version of Afriat’s Theorem that is applicable to a variety of choice environments, beyond the setting of classical consumer theory. This allows us to devise tests for rationalizability in the context of choice data on lotteries, contingent consumption, and intertemporal consumption. We also establish a version of Richter’s Theorem that characterizes the strict rationalizability of...

We use a money pump argument to measure deviations from the revealed preference axioms. Using a panel data set of food expenditures, we find a large number of violations of the weak axiom of revealed preference. The money pump costs are small, which indicate that the violations of revealed preference are not severe. While most households’ behavior deviates from rationality, by our measure they ...

We conduct a proper test of the claim that people are overcon…dent, in the sense that they believe that they are better than others. The results of the experiment we present do not allow us to reject the hypotheses that the data has been generated by perfectly rational, unbiased, and appropriately con…dent agents. Keywords: Overcon…dence; Better than Average; Experimental Economics; Irrationali...