Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101328
Authors: 
Adams, Abi
Cherchye, Laurens
De Rock, Bram
Verriest, Ewout
Year of Publication: 
2014
Series/Report no.: 
IFS Working Papers W14/08
Abstract: 
In this paper, we develop a revealed preference methodology that allows us to explore whether time inconsistencies in household choice are the product of individual preference nonstationarities or the result of individual heterogeneity and renegotiation within the collective unit. An empirical application to household-level microdata highlights that an explicit recognition of the collective nature of household choice enables the vast majority of observed behaviour to be rationalised by a theory that assumes preference stationarity at the individual level. The methodology created in this paper also facilitates the recovery of theory-consistent discount rates for each individual within a particular household under study. We find that couples characterised by lower divergence in spousal discount rates are older, which we take as an indication of experiencing higher match quality.
Subjects: 
time consistency
collective choice
full efficiency
renegotiation
revealed preference
JEL: 
D11
D12
D13
C14
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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