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Bounded rationality and limited datasets

Author

Listed:
  • de Clippel, Geoffroy

    (Department of Economics, Brown University)

  • Rozen, Kareen

    (Department of Economics, Brown University)

Abstract

Bounded rationality theories are typically characterized over exhaustive data sets. We develop a methodology to understand the empirical content of such theories with limited data, adapting the classic, revealed-preference approach to new forms of revealed information. We apply our approach to an array of theories, illustrating its versatility. We identify theories and datasets testable in the same elegant way as Rationality, and theories and datasets where testing is more challenging. We show that previous attempts to test consistency of limited data with bounded rationality theories are subject to a conceptual pitfall that may lead to false conclusions that the data is consistent with the theory.

Suggested Citation

  • de Clippel, Geoffroy & Rozen, Kareen, 2021. "Bounded rationality and limited datasets," Theoretical Economics, Econometric Society, vol. 16(2), May.
  • Handle: RePEc:the:publsh:4070
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    References listed on IDEAS

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    More about this item

    Keywords

    Bounded rationality; revealed preference; limited data;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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