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Classifying bounded rationality in limited data sets: a Slutsky matrix approach

Author

Listed:
  • Victor H. Aguiar

    (University of Western Ontario)

  • Roberto Serrano

    (Brown University)

Abstract

Given any observed finite sequence of prices, wealth, and demand choices, we propose a way to measure and classify the departures from rationality in a systematic fashion, by connecting violations of the underlying Slutsky matrix properties to the length of revealed demand cycles. The approach complements our previous study (Aguiar and Serrano in J Econ Theory 172:163–201, 2017), which is based on the entire demand function. The methodology can be easily applied in experimental demand data sets.

Suggested Citation

  • Victor H. Aguiar & Roberto Serrano, 2018. "Classifying bounded rationality in limited data sets: a Slutsky matrix approach," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(4), pages 389-421, November.
    • Handle: RePEc:spr:series:v:9:y:2018:i:4:d:10.1007_s13209-018-0178-0
    DOI: 10.1007/s13209-018-0178-0
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    References listed on IDEAS

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    Cited by:

    1. Charles Gauthier & Raghav Malhotra & Agustin Troccoli Moretti, 2022. "Finite Tests from Functional Characterizations," Papers 2208.03737, arXiv.org, revised Jul 2024.
    2. Victor H. Aguiar & Roland Pongou & Roberto Serrano & Jean-Baptiste Tondji, 2018. "An Index of Unfairness," Working Papers 2018-9, Brown University, Department of Economics.

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    More about this item

    Keywords

    Consumer theory; Rationality; Slutsky matrix norm; Revealed preference approach; Bounded rationality;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D10 - Microeconomics - - Household Behavior - - - General

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