The geometry of consumer preference aggregation

Fedor Sandomirskiy and Philip Ushchev

No 19100, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We revisit a classical question of how individual consumer preferences and incomes shape aggregate behavior. We develop a method that applies to populations with homothetic preferences and reduces the hard problem of aggregation to simply computing a weighted average in the space of logarithmic expenditure functions. We apply the method to identify aggregation-invariant preference domains, characterize aggregate preferences from common domains like linear or Leontief, and describe indecomposable preferences that do not correspond to the aggregate behavior of any non-trivial population. Applications include robust welfare analysis, information design, discrete choice models, pseudo-market mechanisms, and preference identification.

Date: 2024-05
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Working Paper: The geometry of consumer preference aggregation (2024)
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