Revealed preference with limited consideration

Thomas Demuynck and Christian Seel

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufficient conditions for consistency of observed choices with the existence of consideration set restrictions. The same conditions can also be derived from a model in which the consideration set formation is endogenous and based on subjective prices. By imposing restrictions on these subjective prices, we obtain additional refined revealed preference tests. We illustrate and compare the performance of our tests by means of a dataset on household consumption choices.

Date: 2018-12-01
Note: SCOPUS: ar.j
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Citations: View citations in EconPapers (9)

Published in: American Economic Journal. Microeconomics (2018) v.10 n° 1,p.102-131

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Related works:
Journal Article: Revealed Preference with Limited Consideration (2018)
Working Paper: Revealed preference with limited consideration (2014)
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