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Revealed Preferences in a Heterogeneous Population

Stefan Hoderlein and Jörg Stoye

The Review of Economics and Statistics, 2014, vol. 96, issue 2, 197-213

Abstract: This paper explores the empirical content of the weak axiom of revealed preference (WARP) for repeated cross-sections. In a heterogeneous population, the fraction of consumers who violate WARP is not point identified but can be bounded. These bounds, as well as some nonparametric refinements, correspond to intuitive behavioral assumptions if there are two goods. With three or more goods, such intuitions break down, and plausible assumptions can have counterintuitive implications. We also provide estimators and confidence regions. The empirical application reveals that in the British Family Expenditure Survey, upper bounds are frequently positive but lower bounds are not significantly so. © 2014 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Keywords: revealed preference; weak axiom; heterogeneity; partial identification; moment inequalities (search for similar items in EconPapers)
JEL-codes: C14 C12 D11 D12 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Revealed Preferences in a Heterogeneous Population (2009) Downloads
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The Review of Economics and Statistics is currently edited by Amitabh Chandra, Olivier Coibion, Bryan S. Graham, Shachar Kariv, Amit K. Khandelwal, Asim Ijaz Khwaja, Brigitte C. Madrian and Rohini Pande

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