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Welfare analysis when choice is status-quo biased

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  • Maniquet, François
  • Nosratabadi, Hassan

Abstract

We provide a revealed preference analysis in models where choice may be status-quo biased. We study the relevant case in which data is limited and make reasonable assumptions on how status-quo may structure behavior. We show how to elicit true, welfare-relevant, preferences of a biased decision maker and argue that imposing more structure may significantly improve welfare analysis. We prove that a combination of two variants of the well-known strong-axiom of revealed preference characterizes status-quo biased behavior.

Suggested Citation

  • Maniquet, François & Nosratabadi, Hassan, 2022. "Welfare analysis when choice is status-quo biased," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:mateco:v:102:y:2022:i:c:s0304406822000623
    DOI: 10.1016/j.jmateco.2022.102718
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    References listed on IDEAS

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