Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/111745
Authors: 
Heufer, Jan
Hjertstrand, Per
Year of Publication: 
2015
Series/Report no.: 
Tinbergen Institute Discussion Paper 15-064/I
Abstract: 
We provide a nonparametric revealed preference approach to demand analysis based on homothetic efficiency. Homotheticity is a useful restriction but data rarely satisfies testable conditions. To overcome this we provide a way to estimate homothetic efficiency of consumption choices. It generalises Heufer's (2013) two-dimensional concept to arbitrary dimensions and is motivated by a form of rationalisation similar to Halevy et al. (2012). The method allows to recover larger preferred and worse sets and provides considerably more preditive success and discriminatory power against random behaviour. An application to experimental and household expenditure data illustrates the potential of our approach.
Subjects: 
Demand Theory
Efficiency
Experimental Economics
Homotheticity
Non-parametric Analysis
Revealed Preference
Utility Maximisation
JEL: 
C14
D11
D12
Document Type: 
Working Paper

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