Consistent Subsets – Computationally Feasible Methods to Compute the Houtman-Maks-Index

Jan Heufer and Per Hjertstrand

No 523, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We provide two methods to compute the largest subset of a set of observations that is consistent with the Generalised Axiom of Revealed Preference. The algorithm provided by Houtman and Maks (1985) is not comput ationally feasible for larger data sets, while our methods are not limited in that respect. The first method is a variation of Gross and Kaiser's (1996) approximate algorithm and is only applicable for two-dimensional data sets, but it is very fast and easy to implement. The second method is a mixed-integer linear programming approach that is slightly more involved but still fast and not limited by the dimension of the data set.

Keywords: demand theory; efficiency; nonparametric analysis; revealed preference; utility maximisation (search for similar items in EconPapers)
JEL-codes: C14 D11 D12 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Consistent subsets: Computationally feasible methods to compute the Houtman–Maks-index (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:523

DOI: 10.4419/86788598

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