We present a method for evaluating the welfare of a decision maker, based on observed choice data. Unlike the standard economic theory of revealed preference, our method can be used whether or not the observed choices are rational. Paralleling the standard theory we present a model for choice...

This chapter surveys issues in positive second-best theory, specifically the theory of the optimal pricing of goods produced by public firmsthat is, firms whose objective is the maximization of social welfare. It is assumed that these firms, characteristically, display increasing returns to...