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This note explains the equivalence between approximate rationalizability and approximate cost-rationalizability within the context of consumer demand. In connection with these results, we interpret Afriat’s (1973) critical cost efficiency index (CCEI) as a measure of cost (in)efficiency, in...
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The Allais critique of expected utility theory (EUT) has led to the development of theories of choice under risk that …
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% of the subjects exhibit significant deviations from rational probability weighting consistent with prospect theory. 20 …
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