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Non-Parametric Bounds for Non-Convex Preferences

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

Abstract: 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) Downloads
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