| This dissertation explores how quantifiable deviations from classical rationality can be useful in understanding economic behavior. The first chapter presents a method for identifying reference points in a menu. Choice functions that satisfy the Existence of Relevant Alternatives axiom exhibit revealed preference reversals, but are well behaved when the reference point remains unchanged. By looking at choice reversals over menus that differ by a single option, the reference point can be identified and separated out from a rational utility function. The model also provides a theory for selecting among multiple reference points in a tractable manner. The second chapter presents a model of violent crime which relies on an esteem generation function and the strategic interactions between players. The functional form of esteem obeys psychological findings, is quantifiable and directly affects the utility of violent actions. Esteem can be acquired through wages or through violence and the resulting model presented provides a profile for a violent criminal based on self esteem type and income and establishes a link between aggregate crime rates and relative income levels which coincide with observed data on violent crime. |
