Research

Working Papers

Irrational Random Utility models (joint with Henrik Petri). [PDF]

ABSTRACT: We show that the set of aggregate choices of a population of rational decision-makers - random utility models (RUMs) - can be represented by a population of irrational ones if, and only if, their preferences are sufficiently uncorrelated. We call this representation: Irrational RUM. We then show that almost all RUMs can be represented by a population in which at least some decision-makers are irrational and that under specific conditions their irrational behavior is unconstrained.

Behavioral Welfare Analysis and Revealed Preference: Theory and Experimental Evidence. JOB MARKET PAPER [PDF] - Online Appendix [PDF]  - (Reject & Resubmit - Economic Theory)

ABSTRACT: Eliciting preferences from decision-makers who are not utility maximizers implies an intrinsic trade-off between obtaining a coarse preference and an incorrect one (false-positive). Some current tools minimize false-positives but become coarser and coarser as the dataset grows. We propose an informational property [Informational Responsiveness] that limits the coarseness problem and, as the dataset grows, characterizes a family of tools that can successfully elicit the underlying preference from a broad set of models. Through a novel experiment, we show that these tools substantially reduce the coarseness of the elicited preference while only marginally increasing false-positives. In fact, if the researcher is forced to resolve the uncertainty given by the coarseness of the elicited preference, we show that our proposal leads to a substantial reduction in the expected number of false positives.

Imperfect Discrimination, Similarity, and Stochastic Transitivity. [PDF] - Online Appendix [PDF] - (Revise & Resubmit - Economic Theory Bulletin)

ABSTRACT: We study the relationship between imperfect discrimination, similarity, and stochastic transitivity in generalized versions of Perturbed Utility (Fudenberg et al. 2015) and Fechnerian models (Debreu, 1958). We show that these models are equivalent and that, within them, the properties of a similarity function can characterize all notions of stochastic transitivity (as Weak, Moderate, and Strong). Specifically, Natenzon & He (2023) have recently shown that choice probabilities are moderately transitive if and only if the similarity function is a metric. We provide a counterpoint and show that unless choice probabilities are strongly transitive, the similarity function can violate the triangle inequality.

Rationality is not Consistency. [PDF]- Online Appendix [PDF] - (Revise & Resubmit - Social Choice and Welfare)

ABSTRACT: We investigate whether the standard definition of economic rationality as consistency is correlated with decision-making ability. We argue that documented positive correlations are often based on incorrect identification strategies due to potential confounding factors. We use a theoretical framework to define consistency and a novel experimental design to show that consistency and decision-making ability are logically independent. Then, we investigate the factors that, in our experiment, drive violations of consistency. We find that the use of heuristics is by far the major driver of consistency and is not correlated with decision-making ability measured as cognitive sophistication and level of understanding of the design. Overall, our experimental evidence raises doubts about the choice of language that equates consistency with rationality in economics. 

Behavioural heterogeneity and preference elicitation in MPLs (joint with Valentino Dardanoni). [New Draft available soon] 

ABSTRACT: We use a nonparametric empirical Bayes approach to estimate the joint distribution of individual preference and precision parameters in MPL designs. Using a representative sample of the Danish population, we find high levels of behavioural heterogeneity with multimodal marginal distributions of both preference and precision. In particular, the distribution of precision reveals the existence of a substantial portion of individuals (30-40\%) who use randomization. We replicate our results on two other experimental datasets with different populations, for risk and time preferences, and with and without multiple switching.

Dishonesty: the role of planning, temptation, and self-control (joint with Ivan Soraperra). [PDF]

ABSTRACT: Accumulated experimental evidence shows that, when people have the opportunity to cheat, they often take it. Most literature on cheating opportunities forces people into a tempting situation where they face a trade-off between money and morality. In our paper, we ask whether people are sophisticated in their cheating behavior and whether they search for or avoid these trade-offs. Overall, participants in the experiment exhibit very little temptation, i.e., virtually no one is willing to pay a cost to avoid the possibility of misreporting in a coin-flip-like task, and they are able to stick to their plan consistently. Participants with a strict preference for the tempting situation, i.e., those who are planning to cheat, show a winning rate of about 95% and those who are indifferent between having and not having the opportunity, i.e., who are planning to be honest, show a winning rate that is close to 50%. 

Work in Progress

Revealed Preference and Rationality Measurement with Indecision. [PDF]

ABSTRACT: We model an indecisive decision maker with a two-stage procedure in which he first maximizes an incomplete preference relation and then randomizes over the remaining alternatives. We construct a family of indexes of rationality and explore the implications of model assumptions on rationality measurement. Then, using experimental data we compare our family of indexes to the main existing indexes in the literature.

Regular stochastic choice and boundedly rational decision-makers (joint with Henrik Petri). [Draft available soon]

Rationality in school children. (joint with Valentino Dardanoni and Carla Guerriero and Marco Mariotti and Paola Manzini).  [Draft available soon]

Preferences for social mobility: an experimental approach. (joint with Valentino Dardanoni, Vincenzo Prete, and Ivan Soraperra).

Notes

Note on Deterministic and Stochastic Choice: Regularity and Property Alpha. [PDF]

ABSTRACT: Regularity (Block & Marschak, 1960] and Property Alpha [Sen, 1971] are often seen as equivalent properties in deterministic and stochastic choice. We argue that this equivalence is misleading.