Slutsky Matrix Norms and the Size of Bounded Rationality

Victor Aguiar and Roberto Serrano

No 2013-16, Working Papers from Brown University, Department of Economics

Abstract: Given any observed demand behavior by means of a demand function, we quantify by how much it departs from rationality. Using a recent elab- oration of the "almost implies near" principle, the measure of the gap is the smallest norm of the correcting matrix that would yield a Slutsky ma- trix with its standard rationality properties (symmetry, singularity, and negative semide niteness). A useful classi cation of departures from ra- tionality is suggested as a result. Variants, examples, and applications are discussed, and illustrations are provided using several bounded rationality models.

Keywords: consumer theory; rationality; Slutsky matrix; bounded ratio- nality; "almost implies near" principle. (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://economics.brown.edu/sites/g/files/dprerj72 ... rs/2013-16_paper.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bro:econwp:2013-16

Access Statistics for this paper

More papers in Working Papers from Brown University, Department of Economics Department of Economics, Brown University, Providence, RI 02912.
Bibliographic data for series maintained by Brown Economics Webmaster ().