TY  - JOUR
AU  - Beshears,John
AU  - Choi,James J.
AU  - Laibson,David
AU  - Madrian,Brigitte C.
TI  - How are Preferences Revealed?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13976
PY  - 2008
Y2  - May 2008
UR  - http://www.nber.org/papers/w13976
L1  - http://www.nber.org/papers/w13976.pdf
N1  - Author contact info:
John Beshears
Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-7298
Tel: 650/723-6792
E-Mail: beshears@nber.org

James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu

David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com

Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu
AB  - Revealed preferences are tastes that rationalize an economic agent’s observed actions. Normative    preferences represent the agent's actual interests. It sometimes makes sense to assume that revealed preferences are identical to normative preferences. But there are many cases where this assumption is violated. We identify five factors that increase the likelihood of a disparity between revealed          preferences and normative preferences: passive choice, complexity, limited personal experience, third- party marketing, and intertemporal choice. We then discuss six approaches that jointly contribute to the identification of normative preferences: structural estimation, active decisions, asymptotic choice, aggregated revealed preferences, reported preferences, and informed preferences. Each of these approaches uses consumer behavior to infer some property of normative preferences without equating revealed and normative preferences. We illustrate these issues with evidence from savings and investment outcomes.
ER  -