Revealed cardinal preference

József Sákovics

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: I prove that as long as we allow the marginal utility for money (lambda) to vary between purchases (similarly to the budget) then the quasi-linear and the ordinal budget-constrained models rationalize the same data. However, we know that lambda is approximately constant. I provide a simple constructive proof for the necessary and sufficient condition for the constant lambda rationalization, which I argue should replace the Generalized Axiom of Revealed Preference in empirical studies of consumer behavior.

Pages: 8
Date: 2012-01
New Economics Papers: this item is included in nep-mic and nep-upt
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Revealed cardinal preference (2013)
Working Paper: Revealed cardinal preference (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:212

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