Mutually Consistent Revealed Preference Demand Predictions

Abi Adams

American Economic Journal: Microeconomics, 2020, vol. 12, issue 1, 42-74

Abstract: Revealed preference restrictions are increasingly used to predict demand behavior 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 non-convexities in the set of predictions that arise when making multiple predictions. I develop a mixed integer programming characterization 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.

JEL-codes: C61 D11 D12 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/mic.20150216 (application/pdf)
https://www.aeaweb.org/doi/10.1257/mic.20150216.data (application/zip)
https://www.aeaweb.org/doi/10.1257/mic.20150216.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

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:aea:aejmic:v:12:y:2020:i:1:p:42-74

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/mic.20150216

Access Statistics for this article

American Economic Journal: Microeconomics is currently edited by Johannes Hörner

More articles in American Economic Journal: Microeconomics from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().