General Revealed Preference Tests of Weak Separability and Utility Maximization with Incomplete Adjustment
Per Hjertstrand (),
James L. Swofford () and
Gerald A. Whitney ()
Additional contact information
James L. Swofford: Department of Economics and Finance, Postal: University of South Alabama
Gerald A. Whitney: Department of Economics and Finance, Postal: University of New Orleans
No 1327, Working Paper Series from Research Institute of Industrial Economics
We propose more general non-parametric revealed preference tests for weak separability and utility maximization with incomplete adjustment. Hence, these procedures account for a decision maker’s inability to adjust his optimal allocation of the demanded goods and assets. Incomplete adjustment is especially important when modelling preferences of durable goods and assets. The procedures are based on a computationally attractive integer programming approach. Two empirical applications show that it is important to account for incomplete adjustment in consumer demand models of durable consumption goods and monetary assets.
Keywords: Aggregation; Incomplete Adjustment; Revealed Preference; Weak Separability (search for similar items in EconPapers)
JEL-codes: C14 C60 D01 D10 E40 (search for similar items in EconPapers)
Pages: 41 pages
New Economics Papers: this item is included in nep-mic and nep-upt
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