Bayesian Analysis for a Theory of Random Consumer Demand: The Case of Indivisible Goods

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: McCausland (2004a) describes a new theory of random consumer demand. Theoretically consistent random demand can be represented by a "regular" "L-utility" function on the consumption set X. The present paper is about Bayesian inference for regular L-utility functions. We express prior and posterior uncertainty in terms of distributions over the infinite-dimensional parameter set of a flexible functional form. We propose a class of proper priors on the parameter set. The priors are flexible, in the sense that they put positive probability in the neighborhood of any L-utility function that is regular on a large subset of X; and regular, in the sense that they assign zero probability to the set of L-utility functions that are irregular on . We propose methods of Bayesian inference for an environment with indivisible goods, leaving the more difficult case of infinitely divisible goods for another paper. We analyse individual choice data from a consumer experiment described in Harbaugh et al. (2001).

Keywords: Consumer demand; Bayesian methods; flexible functional forms; shape restrictions (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-ecm
Date: Written 2004
View list of references

Downloads: (external link)
http://www.cireq.umontreal.ca/publications/10-2004-cah.pdf (application/pdf)

Related works:
Working Paper: Bayesian Analysis for a Theory of Random Consumer Demand: The Case of Indivisible Goods (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ
Contact information at EDIRC.
Series data maintained by Sharon BREWER ().