Non-parametric bounds for non-convex preferences
Yoram Halevy (),
Dotan Persitz and
Journal of Economic Behavior & Organization, 2017, vol. 137, issue C, 105-112
Choices from linear budget sets are often used to recover consumer's preferences. The classic method uses revealed preference theory to construct non-parametric bounds on the indifference curve that passes through a given bundle. We show that these bounds do not apply to non-convex preferences, and therefore may lead to erroneous predictions and welfare analysis. We suggest an alternative that is based solely on the assumption of monotonicity of preferences.
Keywords: Non-convex preferences; Revealed preferences; Generalized axiom of revealed preference; Partial identification (search for similar items in EconPapers)
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Working Paper: Non-Parametric Bounds for Non-Convex Preferences (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:137:y:2017:i:c:p:105-112
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