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Homothetic Preferences Revealed

Jan (J.P.M.) Heufer () and Per Hjertstrand ()
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Jan (J.P.M.) Heufer: Erasmus University Rotterdam, Erasmus School of Economics; Tinbergen Institute, The Netherlands

No 17-103/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

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)
Date: 2017-11-03
New Economics Papers: this item is included in nep-upt
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