Implications of Pareto efficiency for two-agent (household) choice
AbstractAbstract We study when two-member household choice behavior is compatible with Pareto optimality. We ask when an external observer of household choices, who does not know the individuals' preferences, can rationalize the choices as being Pareto-optimal. Our main contribution is to reduce the problem of rationalization to a graph-coloring problem. As a result, we obtain simple tests for Pareto optimal choice behavior. In addition to the tests, and using our graph-theoretic representation, we show that Pareto rationalization is equivalent to a system of quadratic equations being solvable.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 47 (2011)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/jmateco
Revealed preference Choice theory Pareto efficiency;
Other versions of this item:
- Echenique, Federico & Ivanov, Lozan, . "Implications of Pareto Efficiency for two-agent (household) choice," Working Papers 1308, California Institute of Technology, Division of the Humanities and Social Sciences.
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- Sprumont, Yves, 2000. "On the Testable Implications of Collective Choice Theories," Journal of Economic Theory, Elsevier, vol. 93(2), pages 205-232, August.
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- Lee, SangMok, 2012. "The testable implications of zero-sum games," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 39-46.
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