Before revision: Empirical demand models used for counterfactual predictions and welfare analysis must be rationalizable , i.e. theoretically consistent with utility maximization by heterogeneous consumers.
After revision: Empirical demand models used for counterfactual predictions and welfare analysis must be rationalizable , i.e. theoretically consistent with utility maximization by a heterogeneous population. This paper investigates nonparametric economic rationality in the empirically important context of binary choice.