Revealed cardinal preference

Sákovics, József

Revealed cardinal preference

Economic Theory Bulletin, 2013, vol. 1, issue 1, No 6, 39-45

Abstract: Abstract I prove that as long as we allow the marginal utility for money ( $$\lambda $$ ) to vary between purchases (similarly to the budget), then the quasi-linear and the ordinal budget-constrained models rationalize the same data on consumer purchases. However, in the short run, $$\lambda $$ is approximately constant. I provide a simple constructive proof for the necessary and sufficient condition for the constant $$\lambda $$ rationalization, which I argue should replace the Generalized Axiom of Revealed Preference in empirical studies of consumer behavior.

Keywords: Cardinal utility; Consumer behavior; Rational choice; Partial equilibrium (search for similar items in EconPapers)
JEL-codes: D11 D12 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Working Paper: Revealed cardinal preference (2012)
Working Paper: Revealed cardinal preference (2012)
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DOI: 10.1007/s40505-013-0006-4

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