Revealed Differences


Two individuals are said to be revealed different if their joint decisions are more distant from rationality than either of their individual decisions taken separately. We show that the revealed different relation can be used to identify preference types and therefore to evaluate the heterogeneity of preferences in a completely nonparametric way. Using experimental data from a random sample of the Dutch population, we find that 1,182 individuals can be divided into 131 different preference types, men’s preferences are more heterogeneous than and different from women’s preferences and measured heterogeneity is reduced as stricter definitions of rationality are used.


[Slides: FUR2016]