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Parametric Recoverability of Preferences

Yoram Halevy (), Dotan Persitz () and Lanny Zrill working papers from Vancouver School of Economics

Abstract: We bring revealed preference theory to bear on the problem of recovering approximate parametric preferences from consistent and inconsistent consumer choices. The paper investigates two measures for the incompatibility between the revealed preference relation implied by choices and the ranking induced by the proposed parametric preferences. We provide a novel characterization of several well-known inconsistency indices through these incompatibility measures. This allows a researcher to analyze both consistent and inconsistent choices, by decomposing an incompatibility measure into inconsistency and misspecification indices.

Keywords: Revealed Preference; Recoverability of Preferences; GARP; inconsistency; incompatibility (search for similar items in EconPapers)
JEL-codes: C00 D00 D11 C18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-upt
Date: 2012-06-30, Revised 2015-08-28
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Journal Article: Parametric Recoverability of Preferences (2018) Downloads
Working Paper: Parametric Recoverability of Preferences (2016) Downloads
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