American Economic Review Vol. 106 No. 12 2016

Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Reply

Jason Abaluck¹; Jonathan Gruber²

¹ Yale School of Management, 227 Church Street, Apt. 10H, New Haven, CT 06510, and NBER (e-mail: ) · ² Department of Economics, MIT, 77 Massachusetts Avenue, Bldg. E52-434, Cambridge, MA 02139, and NBER (e-mail: )

Abstract

We explore the in- and out- of sample robustness of tests for choice inconsistencies based on parameter restrictions in parametric models, focusing on tests proposed by Ketcham, Kuminoff and Powers (KKP). We argue that their non-parametric alternatives are inherently conservative with respect to detecting mistakes. We then show that our parametric model is robust to KKP's suggested specification checks, and that comprehensive goodness of fit measures perform better with our model than the expected utility model. Finally, we explore the robustness of our 2011 results to alternative normative assumptions highlighting the role of brand fixed effects and unobservable characteristics.

DOI

10.1257/aer.20151318

Volume

106

Issue

12

Pages

3962-3987

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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