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Power against random expenditure allocation for revealed preference tests

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  • Hjertstrand, Per

Abstract

This paper proposes new power indices for revealed preference tests. The indices are based on models of irrational consumption behavior where the consumer randomly allocates a certain fraction of expenditure. The methods allow a researcher to trace out the entire power curve against random expenditure allocation. The power indices are illustrated on altruistic choices in experimental data.

Suggested Citation

  • Hjertstrand, Per, 2021. "Power against random expenditure allocation for revealed preference tests," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 36-45.
    • Handle: RePEc:eee:jeborg:v:188:y:2021:i:c:p:36-45
    DOI: 10.1016/j.jebo.2021.05.001
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    References listed on IDEAS

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    8. Mark Dean & Daniel Martin, 2016. "Measuring Rationality with the Minimum Cost of Revealed Preference Violations," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 524-534, July.
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    Cited by:

    1. Hjertstrand, Per, 2022. "Nonparametric Analysis of the Mixed-Demand Model," Working Paper Series 1430, Research Institute of Industrial Economics.

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    More about this item

    Keywords

    GARP; Power; Revealed preference;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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