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Revealed statistical consumer theory

Pawel Dziewulski (), Roy Allen () and John Rehbeck ()
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Roy Allen: University of Western Ontario
John Rehbeck: Ohio State University

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: We provide a microfoundation for using aggregated data (e.g. mean purchases) when evaluating consumer choice data. We present a model of statistical consumer theory where the individual maximizes their utility with respect to a distribution of bundles that is constrained by a statistic of the distribution (e.g. mean expenditure). We show that this behavior is observationally equivalent to an individual whose preferences depend only on the statistic of the distribution. This means that despite working with distributions, the empirical content of the model only depends on a finite-dimensional statistic. Statistical consumer theory neither nests nor is nested in the random utility approach. We show this approach generalizes quasilinear utility with random preferences and income, mean-variance preferences, and preferences that depend on arbitrary moments.

Date: 2021-02
New Economics Papers: this item is included in nep-upt
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Working Paper: Revealed statistical consumer theory (2019) Downloads
Working Paper: Revealed Statistical Consumer Theory (2019) Downloads
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