Research

Restricting individuals' access to some goods may steer their desire toward their substitutes, a phenomenon known as the forbidden fruit effect. We propose and study a model of restriction-sensitive choice (RSC) that rationalizes such behaviors and that is compatible with the prominent psychological explanations: reactance theory and commodity theory. We show how the ingredients of our model can be identified from choice data, namely, from choice reversals caused by the removal of options. We give an axiomatic characterization of RSC. We also derive a measure of the freedom offered by opportunity sets for an agent whose final choices follow our procedure. Three applications are then analyzed. We show that our model can accommodate the emergence of conspiracy theories and the backlash of integration policy targeted toward minorities. We finally study a principal's delegation problem to an agent whose choice is an RSC. We find that the effect on the agent's welfare is ambiguous.s.

We study the welfare implications of personalized pricing based on consumers' tastes. A social planner seeking to maximize weighted consumer surplus has the ability to segment the market based on consumers' willingness to pay for a good sold by a monopolist. The latter can charge different prices to different segments. We show that (i) as long as the Pareto weights of the planner's welfare function are non-negative, socially optimal segmentations never sacrifice efficiency, and (ii) if the planner attaches sufficient weight to consumers with lower willingness to pay, then socially optimal segmentations may transfer some of the surplus from the consumers with the highest willingness to pay to the monopolist---call it a \textit{rent}. We derive some characteristics of optimal segmentations when the redistributive objective is strong: this gives a procedure to construct an optimal segmentation in this case and allows us to characterize the set of markets for which no rent is ever given to the producer. 

In this note, we tackle an indeterminacy problem left aside in our companion paper ``Revealed Deliberate Preference Change'' and characterize a more general version of the representation.

We propose a model of chosen preferences together with conditions on choice data that make our model falsifiable and identifiable. Preferences on alternatives are induced by preferences on attributes—e.g. candidates for a job may be experienced or inexperienced. Choice behavior is driven by a subset of attributes. When the agent becomes aware of an attribute, she decides to make it relevant or irrelevant for her future choices—e.g. employers may deliberately ignore race in the future to prevent discrimination. We identify when this decision is based on the maximization of a meta-preference, implying that preference changes are deliberate. The revealed preference implication is that choice reversals are ``rational'' if and only if they break or create indifference with respect to pairs of alternatives that share the same attributes---which reflects DM's internal consistency when changing preference. Our representation shows that theories of endogenous preferences, motivated reasoning, evolving attention, changing awareness, etc. can be given rational foundations that are empirically testable.