Revealed preference with limited consideration

Thomas Demuynck and Christian Seel

No 36, Research Memorandum from Maastricht University, Graduate School of Business and Economics (GSBE)

Abstract: We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufficient conditions for consistency of observed choices with the existence of consideration set restrictions. The same conditions can also be derived from a model in which the consideration set formation is endogenous and based on subjective, unconstrained beliefs about the prices. By imposing restrictions on these subjective beliefs, we obtain additional refined revealed preference tests. We illustrate and compare the performance of our tests by means of a dataset on household consumption choices.

Date: 2014-01-01
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 Preference with Limited Consideration (2018)
Working Paper: Revealed preference with limited consideration (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:unm:umagsb:2014036

DOI: 10.26481/umagsb.2014036

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