Corpus ID: 237502862

On the meaning of the Critical Cost Efficiency Index

  title={On the meaning of the Critical Cost Efficiency Index},
  author={Federico Echenique},
This note provides a critical discussion of the Critical CostEfficiency Index (CCEI) as used to assess deviations from utility-maximizing behavior. I argue that the CCEI is hard to interpret, and that it can disagree with other plausible measures of “irrational” behavior. The common interpretation of CCEI as wasted income is questionable. Moreover, I show that one agent may have more unstable preferences than another, but seem more rational according to the CCEI. This calls into question the… Expand

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