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Shachar Kariv (University of California, Berkeley)
25 October 2011 @ 12:00
- Past event
Abstract
Revealed preference theory offers a criterion for decision-makingquality: if decisions are high quality then there exists a utility functionthat the choices maximize. We conduct a large-scale field experimentthat enables us to test for consistency with utility maximization. Wefind that high-income and high-education subjects display greater levels of consistency than low-income and low-education subjects, men aremore consistent than women, and young subjects are more consistentthan older subjects. We also find that consistency with utility maximization is strongly related to wealth: a standard deviation increasein standard consistency scores is associated with 15-19 percent morewealth.