Recently, Harvard economist Jerry Green has written a new paper, namely Choice, Rationality and Welfare Measurement, co-authored with Daniel Hojman. Traditionally, economics is silent about irrational behavior. So, how to deal with it? Dr. Green and his co-author don't follow the traditional view that choice is a manifestation of preference relations. Instead, they are following a somewhat more "behavioralist" presumption that choice is the result of conflicting motivations that exist in varing "strength". Sounds interesting? Unfortunately, I can not find a full version of this paper.
Here is the abstract:
Economists use observed choices to measure the changes in welfare that result from changes in opportunities. This classical economic method breaks down when choice is irrational. The ever-growing evidence of irrationality makes it essential for economists to confront the problem of welfare measurement when the usual rationality assumption does not hold. In this paper we provide a methodology to allow a form of inference about welfare when choice is irrational. Our method is based on the idea that the source of irrationality is a conflict among an individual's motivations. In traditional economic theory, choice behavior is "explained" by the existence of a preference relation which is consistent with the observed choices. Then an individual is said to behave "as if" they had these preferences. In our model we follow the same "as if" logic: We "explain" choice "as if" it were the result of a resolution of conflicting motivations that exist in varying "strengths". These strengths affect the way the conflict is resolved and hence the choices that are observed.