A Revealed Preference Feasibility Condition for Weak Complementarity

David G. Brown

Departmental Working Papers from Department of Economics, Louisiana State University

Abstract: It is widely reported in the literature that it is not possible to test nonmarket good preference restrictions against revealed preference. While it is clearly impossible to affirm any particular preference restriction as being �true,� it is possible to show that a preference restriction is not feasible. A revealed preference feasibility test for weak complementarity is presented here. With weak complementarity defined by the observable property of nonessentiality and the unobservable property of no-existencevalue, the latter is the actual preference restriction. It is shown that no-existencevalue is feasible if and only if an observable revealed preference condition of �singlepreference� is satisfied. This strong revealed preference condition is nontrivial when there are two or more market goods in addition to the weak complement. With simple Samuelsonian revealed preference we can falsify single-preference and thereby reject weak complementarity. Stone-Geary numeric examples are included to demonstrate these and other results.

Date: 2009-08
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Persistent link: https://EconPapers.repec.org/RePEc:lsu:lsuwpp:2009-08

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