School of Economics and Finance

No. 571: Consumer Choice and Revealed Bounded Rationality

Paola Manzini , Queen Mary, University of London and IZA
Marco Mariotti , Queen Mary, University of London

September 1, 2006

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We study two boundedly rational procedures in consumer behavior. We show that these procedures can be detected by conditions on observable demand data of the same type as standard revealed preference axioms. This provides the basis for a non-parametric analysis of boundedly rational consumer behavior mirroring the classical one for utility maximization.

J.E.L classification codes: D1, D11

Keywords:Bounded rationality, Revealed preference, Consumer choice