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Do children choose rationally? This question matters for several reasons. If children are incapable of choosing rationally, then there is little point in attempting to use standard economic models to describe their behavior. For example, models of family bargaining behavior assume that family members each act rationally to maximize a utility function. On a more applied level, families and society engage in a wide variety of paternalistic policies towards children. These policies use various mechanisms to encourage certain choices and discourage or prohibit others. The issue of rational choice by children is important both for justifying this paternalism and for determining the effectiveness of incentive based mechanisms for enforcing it. It is also difficult to justify using data on children’s choices to draw inferences about their preferences, or to accurately predict their future behavior, if the choices are not rational. In addition to these reasons, which apply to children as children, there is the fact that children grow into adults. An understanding of the development of rational choice behavior over the lifespan may ultimately tell us something about rational choice by adults. Is the ability to choose rationally something that is universally present at very young ages, or does it only appear at adulthood, or even later? Is rational choice the rule, or the exception, among children? If rational

Introduction The classical tools of general equilibrium theory are convexity and general topology. One of Debreu's lasting contributions has been to show how the tools of di#erential topology may serve to yield more refined information about equilibrium. In particular, Debreu (1970) showed that di#erential topology could provide a rigorous formalization of "counting equations and unknowns" to provide a satisfactory result on the determinacy of equilibrium. Debreu required that preferences be representable by C 2 utility functions with non-vanishing gradients and that indi#erence surfaces have non-vanishing curvature. Following Debreu, a natural question to ask is: Are there other interesting classes of preferences (or demands) exhibiting regularity of behavior su#cient to guarantee the generic local determinacy of equilibrium prices? The first results in this direction were obtained by Rader (1972, 1973), who showed that generic finiteness of the equil

Supermodularity of utility has long been understood as capturing the notion of complementarities in consumption behavior. The notion dates to the nineteenth century; Edgeworth and Pareto were two of its main proponents. However, supermodularity is not an ordinal property. We study the ordinal content of supermodularity. We uncover the complete ordinal implications of supermodularity on finite lattices under the additional assumption of weak monotonicity. In this case, it is equivalent to the notion of quasisupermodularity introduced by Milgrom and Shannon. We conclude that supermodularity is a weak property, in the sense that many preferences have a supermodular representation.

NYU ∗ Some of the results reported here were previously distributed in a paper titled “Substantive

We report a laboratory experiment that enables us to estimate four prominent models of ambiguity aversion — Subjective Expected Utility (SEU), Maxmin Expected Utility (MEU), Recursive Expected Utility (REU), and α-Maxmin Expected Utility (α-MEU) — at the level of the individual subject. We employ graphical representations of three-dimensional budget sets over bundles of Arrow securities, one of which promises a unit payoff with a known probability and two with unknown (ambiguous) probabilities. The sample exhibits considerable heterogeneity in preferences, as captured through parameter estimates. Nonetheless, there exists a strong tendency to equate the demands for The experiment was conducted at the Experimental Social Science Laboratory (X-Lab) at UC Berkeley. We thank Raymond Fisman for detailed comments and suggestions. We are also grateful to Yoram Halevy, Tom Palfrey, Chris Shannon, and Bill Zame for helpful discussions. This paper has also benefited from suggestions by the participants

Abstract. I describe a goodness-of-fit measure for revealed preference tests. This index can be used to measure the degree to which an economic agent violates the model of utility maximization. I calculate the violation indices for a 38 consumers and find that the observed choice behavior is very close to optimizing behavior.

Because uncertainty is endemic in a wide variety of economic circumstances, models of decision making under uncertainty play a key role in every field of economics. The standard model of decisions under uncertainty is based on von Neumann and Morgenstern Expected Utility Theory (EUT), so it is natural that experimentalists should want to test the empirical validity of the Savage axioms on which EUT is based. Empirical violations of EUT provoke intriguing questions about the rationality of individual behavior and, at the same time, raise criticisms about the status of the Savage axioms as the touchstone of rationality. These criticisms have generated the development of various theoretical alternatives to EUT, and the investigation of these theories has led to new empirical regularities. For the most part, these experimental investigations use several pairwise choices, à la Allais, to test EUT and its various alternatives, such as weighted utility, implicit expected utility, and prospect theory, among others. Each of these theories gives rise to indifference curves with distinctive shapes in