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The geometry of consumer preference aggregation

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  • Fedor Sandomirskiy
  • Philip Ushchev

Abstract

We revisit a classical question of how individual consumer preferences and incomes shape aggregate behavior. We develop a method that applies to populations with homothetic preferences and reduces the hard problem of aggregation to simply computing a weighted average in the space of logarithmic expenditure functions. We apply the method to identify aggregation-invariant preference domains, characterize aggregate preferences from common domains like linear or Leontief, and describe indecomposable preferences that do not correspond to the aggregate behavior of any non-trivial population. Applications include robust welfare analysis, information design, discrete choice models, pseudo-market mechanisms, and preference identification.

Suggested Citation

  • Fedor Sandomirskiy & Philip Ushchev, 2024. "The geometry of consumer preference aggregation," Papers 2405.06108, arXiv.org.
    • Handle: RePEc:arx:papers:2405.06108
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    File URL: http://arxiv.org/pdf/2405.06108
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