Classifying bounded rationality in limited data sets: a Slutsky matrix approach

Victor Aguiar and Roberto Serrano

SERIEs: Journal of the Spanish Economic Association, 2018, vol. 9, issue 4, No 2, 389-421

Abstract: Abstract Given any observed finite sequence of prices, wealth, and demand choices, we propose a way to measure and classify the departures from rationality in a systematic fashion, by connecting violations of the underlying Slutsky matrix properties to the length of revealed demand cycles. The approach complements our previous study (Aguiar and Serrano in J Econ Theory 172:163–201, 2017), which is based on the entire demand function. The methodology can be easily applied in experimental demand data sets.

Keywords: Consumer theory; Rationality; Slutsky matrix norm; Revealed preference approach; Bounded rationality (search for similar items in EconPapers)
JEL-codes: C60 D10 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s13209-018-0178-0

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