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Consumer Theory with Misperceived Tastes

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  • Geoffroy de Clippel
  • Kareen Rozen

Abstract

Incorporating bounded rationality into the classic consumer theory setting, we study the testable implications of a consumer who may have trouble consistently assessing her subjective tastes. Our model of e-Rationalizability, which bounds the consumerís misperception of her marginal rates of substitution, may arise from various choice heuristics. It also offers a natural, preference-based measure of departure from rationality that is more demanding than Afriatís measure.

Suggested Citation

  • Geoffroy de Clippel & Kareen Rozen, 2018. "Consumer Theory with Misperceived Tastes," Working Papers 2018-10, Brown University, Department of Economics.
    • Handle: RePEc:bro:econwp:2018-10
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    References listed on IDEAS

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    Cited by:

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    2. Roy Allen & John Rehbeck, 2021. "Measuring rationality: percentages vs expenditures," Theory and Decision, Springer, vol. 91(2), pages 265-277, September.

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