The Consistency of Rationality Measures

14:00-15:30, Monday, June 19, 2023

I-206, Boxue Building, DUFE

Dr. Xiao LIU is an associate professor appointed by the School of Economics and Management at Tsinghua University. She graduated with a bachelor's degree from Renmin University of China in 2006 and a doctoral degree from the University of Michigan in the United States in 2012. Her research interests include Experimental economics, Behavioral economics, market design and information economics. Currently serving as the deputy editor in chief of three international journals: Management Science, Journal of Economic Behavior&Organization, Journal of Behavioral and Experimental Economics. Her work has been published in Management Science、Games and Economic Behavior、Journal of Development Economics, among others.

While rationality has been commonly assumed and measured in various settings, an unexplored question arises regarding the extent to which individuals with high rationality scores in one setting would exhibit high scores in another setting. This study investigates the consistency of rationality measures using revealed preference techniques. We combine budgetary decisions in the lab and food decisions in the field based on scanner data to measure the rationality of individual consumers in a large grocery store. We show that the rationality score for risky or social decisions in the lab is uncorrelated with that of food decisions in the field. By contrast, the rationality score is highly correlated between risky and social decisions in the lab, as well as between food decisions in the lab and in the field. We further show that behavioral factors including purchasing experience, personality traits and cognitive skills may underlie rationality scores across different environments.

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