GARP for Kids: On the Development of Rational Choice Behavior

Abstract

Children who reason better also choose more rationally? In this paper we report on the results of an experiment that tests whether children make rational choices about consumption goods. We studied 7- and 11-year-old children and, for comparison, college undergraduates. The exper- iment tests variations on what might be seen as the most basic requirement for rationality, namely that choices must obey transitivity. If a person picks A when given a choice between A than B, and B when given a choice between B and C, then barring indifference rationality re- quires that he must pick A when given a choice between A and C. We also examine how ratio- nality, as measured by several different tests of transitivity and by a simple measure of the size of the violations, changes with age and mathe- matical ability. Section I explains the relevant aspects of the theory that relates choice behavior and utility maximization in more detail. This is followed by a discussion of some previous experiments on adults and animals in Section II, and then by Sections III and IV discussing our protocol and results, respectively; Section V concludes. I. Theory