Mutually Consistent Revealed Preference Demand Predictions

Abigail Adams-Prassl

No 13580, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Revealed preference restrictions are increasingly used to predict demand behaviour at new budgets of interest and as shape restrictions in nonparametric estimation exercises. However, the restrictions imposed are not sufficient for rationality when predictions are made at multiple budgets. I highlight the nonconvexities in the set of predictions that arise when making multiple predictions. I develop a mixed integer programming characterisation of the problem that can be used to impose rationality on multiple predictions. The approach is applied to the UK Family Expenditure Survey to recover rational demand predictions with substantially reduced computational resources compared to known alternatives.

Keywords: Revealed preference; Mixed integer programming; Demand estimation (search for similar items in EconPapers)
JEL-codes: C60 D11 D12 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-cmp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://cepr.org/publications/DP13580 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13580

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP13580

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().