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Homothetic preferences revealed

Jan Heufer and Per Hjertstrand

Journal of Economic Behavior & Organization, 2019, vol. 157, issue C, 602-614

Abstract: We introduce a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects’ preferences and to choose appropriate functional forms for parametric analysis. It has also various other uses such as improving applications of the money metric function or classifying choice data into different preference types. We illustrate some of those approaches using data from an experiment on social preferences.

Keywords: Graphical analysis; Homotheticity; Money metric utility; Recoverability; Revealed preference (search for similar items in EconPapers)
JEL-codes: C14 C91 D11 D12 (search for similar items in EconPapers)
Date: 2019
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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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