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Homothetic Preferences Revealed

Jan Heufer () and Per Hjertstrand ()
Additional contact information
Jan Heufer: Erasmus School of Economics and Tinbergen Institute, Postal: Rotterdam
Per Hjertstrand: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden, http://www.ifn.se/forskare/ifn-forskare/per-hjertstrand

No 1187, Working Paper Series from Research Institute of Industrial Economics

Abstract: We propose a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects' preferences and to choose appropriate functional forms for parametric analysis. It can also be used to extend applications of the money metric function, such as parametric recoverability as introduced by Halevy et al. (2017). It can also improve nonparametric comparison of preferences as suggested by Heufer (2014).

Keywords: Graphical Analysis; Homotheticity; Money Metric Utility; Recoverability; Revealed Preference (search for similar items in EconPapers)
JEL-codes: C14 C91 D11 D12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-upt
Date: 2017-11-09
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