Non-Parametric Bounds for Non-Convex Preferences
Yoram Halevy (),
Dotan Persitz () and
Microeconomics.ca working papers from Vancouver School of Economics
Choices from linear budget sets are often used to recover consumer's preferences. The classic method uses revealed preference theory to construct non-parametric bounds on the indifference curve that passes through a given bundle. We show that these bounds do not apply to non-convex preferences, and therefore may lead to erroneous prediction and welfare analysis. We suggest an alternative that is based on the assumption of monotonicity of preferences.
Keywords: Revealed Preferences; Generalized Axiom of Revealed Preference; Partial Identification. (search for similar items in EconPapers)
JEL-codes: D11 D12 C91 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2015-12-30, Revised 2016-10-16
New Economics Papers: this item is included in nep-upt
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Journal Article: Non-parametric bounds for non-convex preferences (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ubc:pmicro:yoram_halevy-2015-23
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