TOM (Théorie, Organisation et Marchés) Lunch Seminar

Du 17/05/2018 de 12:30 à 13:30

salle R1-15, campus Jourdan - 48 bd Jourdan 75014 Paris

BOUACIDA Elias (PSE)

Consistency of Choice Correspondences: a Theoretical and an Empirical Study.

Experiments in economics generally elicit a choice function: for a given choice set, a decision maker chooses exactly one alternative. It is a restriction on most models of revealed preferences, that start with a choice correspondence: for a given choice set, a decision maker chooses a subset of alternatives. This paper explores the impact of this restriction on the formulation of revealed preferences axioms and on the consistency of observed behaviors. In order to do so, a new methodology is built to elicit a choice correspondence in an incentive compatible way, called pay-for-certainty. We introduce a new theoretical requirements, increasing chosen set that guarantees the elicitation of a proper choice correspondence with the pay-for-certainty methodology. We implement the methodology in the laboratory and compare it to choice functions. 40.13% of observed choices are singletons and only 2.33% of subjects have single-peaked preferences. Increasing chosen set is verified by 60.47% of the subjects in the relevant case. 46.51% of all choices correspondences verify WARP whereas 58.82% of all choice functions do. In a second step, we use the pay-for-certainty methodology to explore the completeness of preferences assumptions, a task impossible with choice functions. We assess degrees of incomplete preferences. A lower bound introduced by Eliaz and Ok (2006) explains only 2.68% of observed behaviors. We characterized and upper bound. It is equivalent to the decision maker maximizing a strict partial preference. It explains 14.77% of observed behaviors. These results points to the relevance of observing choice correspondences instead of choice functions when a choice correspondence is needed to test a theory. .