Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210915
Authors: 
Demuynck, Thomas
Hjertstrand, Per
Year of Publication: 
2019
Series/Report no.: 
IFN Working Paper No. 1274
Abstract: 
Since Paul Samuelson introduced the theory of revealed preference, it has become one of the most important concepts in economics. This chapter surveys some recent contributions in the revealed preference literature. We depart from Afriat's theorem, which provides the conditions for a data set to be consistent with the utility maximization hypothesis. We provide and motivate a new condition, which we call the Varian inequalities. The advantage of the Varian inequalities is that they can be formulated as a set of mixed integer linear inequalities, which are linear in the quantity and price data. We show how the Varian inequalities can be used to derive revealed preference tests for weak separability, and show how it can be used to formulate tests of the collective household model. Finally, we discuss measurement errors in the observed data and measures of goodness-of-fit, power and predictive success.
Subjects: 
Afriat's theorem
Collective household model
GARP
Mixed integer linear programing
Revealed preference
Varian inequalities
Weak separability
JEL: 
C60
C63
D01
D11
Document Type: 
Working Paper

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