Revealed Price Preference: Theory and Stochastic Testing

Rahul Deb, Yuichi Kitamura, John Quah and Jörg Stoye

Working Papers from University of Toronto, Department of Economics

Abstract: We develop a model of demand where consumers trade-off the utility of consumption against the disutility of expenditure. This model is appropriate whenever a consumer's demand over a strict subset of all available goods is being analyzed. Data sets consistent with this model are characterized by the absence of revealed preference cycles over prices. The model is readily generalized to the random utility setting, for which we develop nonparametric statistical tests. Our application on national household consumption data provides support for the model.

Keywords: revealed preference; random utility; nonparametric testing; nonseparability; welfare analysis; moment selection (search for similar items in EconPapers)
JEL-codes: D11 D12 D60 (search for similar items in EconPapers)
Pages: Unknown pages
Date: 2017-05-17
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Citations: View citations in EconPapers (8)

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Working Paper: Revealed Price Preference: Theory and Stochastic Testing (2017)
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