|
EconStor >
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Essen >
Ruhr Economic Papers, RWI >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/26801
|
| | |
| Title: | | Revealed preference and the number of commodities  |
| Authors: | | Heufer, Jan |
| Issue Date: | | 2007 |
| Series/Report no.: | | Ruhr economic papers 36 |
| Abstract: | | This work consists of two parts: First, it is shown that for a two-dimensional commodity space any homothetic utility function that rationalizes each pair of observations in a set of consumption data also rationalizes the entire set of observations. The result is stated as a pairwise version of Varians Homothetic Axiom of Revealed Preference and is used to provide a simplified nonparametric test of homotheticity. In the second part a unifying proof technique is presented to show that the Weak Axiom of Revealed Preference (WARP) implies the Strong Axiom of Revealed Preference (SARP) for two commodities yet not for more commodities. It also shows that preference cycles can be of arbitrary length.While these results are already known, the proof here generalizes and unifies the existing ones insofar as it gives necessary and sufficient conditions for preference cycles to exist. It is then shown that in two dimensions the necessary condition cannot be fulfilled, whereas in more than two dimensions the sufficient conditions can always be met. The proof admits an intuitive understanding of the reason by giving a geometric interpretion of preference cycles as paths on indifference surfaces. |
| Subjects: | | Homotheticity nonparametric tests preference cycles revealed preference SARP WARP |
| JEL: | | C14 C60 D11 D12 |
| ISBN: | | 978-3-86788-033-6 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des RWI Ruhr Economic Papers, RWI
|
| Files in This Item:
| |
|
| No. of Downloads:
| |
| last Month |
last 3 Month |
total |
|
|
|
|
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/26801
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|