Satisficing, aggregation, and quasilinear utility
Abstract
This paper studies approximation error in the quasilinear utility model. Error arises because individuals do not perfectly optimize, and instead satisfice. We investigate the consequences of individual satisficing for modeling aggregate demand, providing an approximate aggregation theorem. We present a simple method for statistical inference on the minimal level of satisficing needed to explain aggregate data. In an illustrative application to scanner panel data, we find that individual‐level data require a nontrivial degree of satisficing, but aggregate data admit a representative agent that maximizes a quasilinear utility function.
Fields of Study & Subjects
Spatial and Panel Data Analysis
Economic Policies and Impacts
Economic and Environmental Valuation
Publication details
- Journal / source
- Quantitative Economics
- Publisher
- The Econometric Society
- Volume
- 17
- Issue
- 2
- Pages
- 431–460
- Publication date
- 1 January 2026
- Language
- EN