Heuristics for Deciding Collectively Rational Consumption Behavior

Fabrice Talla Nobibon, Laurens Cherchye (), Bram De Rock, Jeroen Sabbe () and Frederic Vermeulen Vermeulen

No 2008_028, ECARES Working Papers from Université Libre de Bruxelles, Ecares

Abstract: We consider the computational problem of testing whether observed household consumption behavior satisfies the Collective Axiom of Revealed Preferences (CARP). We propose a graph such that the existence of a node-partitioning giving rise to two induced subgraphs that are acyclic implies that the data satisfy CARP. Furthermore, we propose and implement heuristics that are quite fast, that can be used to check reasonably large datasets for CARP and that can be of particular interest when used prior to computationally demanding approaches. Finally, from the computational results we conclude that these heuristics can be e ective in testing CARP.

Keywords: Collective model of household consumption; Collective Axiom of Revealed Preference; Pareto efficiency; Directed graph; Graph coloring; Graph partitioning; Acyclic subgraph; Heuristics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp
Date: 2008
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Working Paper: Heuristics for deciding collectively rational consumption behavior (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:eca:wpaper:2008_028

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