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Is utility transferable? A revealed preference analysis

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  • Laurens Cherchye
  • Thomas Demuynck
  • Bram De Rock

Abstract

The transferable utility hypothesis underlies important theoretical results in household economics. We provide a revealed preference framework for bringing this (theoretically appealing) hypothesis to observational data. We establish revealed preference conditions that must be satisfied for observed household consumption behavior to be consistent with transferable utility. We also show that these conditions are testable by means of integer programming methods.
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Suggested Citation

  • Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2015. "Is utility transferable? A revealed preference analysis," ULB Institutional Repository 2013/251998, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/251998
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    References listed on IDEAS

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    Cited by:

    1. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK, 2010. "Noncooperative household consumption with caring," Working Papers of Department of Economics, Leuven ces10.34, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    2. Marco Castillo & Mikhail Freer, 2023. "A general revealed preference test for quasilinear preferences: theory and experiments," Experimental Economics, Springer;Economic Science Association, vol. 26(3), pages 673-696, July.
    3. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2017. "Household Consumption When the Marriage Is Stable," American Economic Review, American Economic Association, vol. 107(6), pages 1507-1534, June.
    4. Demuynck, Thomas & Potoms, Tom, 2020. "Weakening transferable utility: The case of non-intersecting Pareto curves," Journal of Economic Theory, Elsevier, vol. 188(C).
    5. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2015. "Is utility transferable? a revealed preference analysis," Theoretical Economics, Econometric Society, vol. 10(1), January.
    6. Ian Crawford & Bram De Rock, 2014. "Empirical Revealed Preference," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 503-524, August.
    7. Nesterov, Y & Shikhman, V., 2015. "Computation of Fisher-Gale equilibrium by auction," LIDAM Discussion Papers CORE 2015035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Agatsuma, Yasushi, 2016. "Testable implications of the core in TU market games," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 23-29.
    9. Mikhail Freer & Marco Castillo, 2021. "A General Revealed Preference Test for Quasilinear Preferences: Theory and Experiments," Papers 2111.01248, arXiv.org, revised Dec 2022.

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    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D1 - Microeconomics - - Household Behavior
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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