The Revealed preference approach to collective consumption behavior: testing, recovery and Welfare analysis

Laurens Cherchye, Bram De Rock and Frederic Vermeulen

No 2008-029, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: We present a nonparametric 'revealed preference' methodology for empirically analyzing collective consumption behavior. First, we introduce an integer programming (IP) methodology for testing data consistency with alternative collective consumption models: the 'general' case in which any good can be publicly consumed as well as privately consumed, possibly with externalities; and 'special' cases that impose specific prior structure (e.g. the case with all goods publicly consumed, and the case with all goods privately consumed without externalities). In addition, we show that this IP methodology can include information on 'assignable quantities' for particular goods. Next, we demonstrate that the IP methodology allows for recovering the structural collective decision model (including the sharing rule) from the observed collective consumption behavior. In turn, this makes it possible to address welfare-related questions that are specific to the collective consumption model.

Keywords: collective model; revealed preferences; consumption; testing; recovery; welfare analysis; integer programming (search for similar items in EconPapers)
JEL-codes: C14 D11 D12 D13 (search for similar items in EconPapers)
Pages: 55 p.
Date: 2008-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: The revealed preference approach to collective consumption behavior: testing, recovery and welfare analysis (2007)
Working Paper: The Revealed Preference Approach to Collective Consumption Behavior: Testing, Recovery and Welfare Analysis (2007)
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