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Is utility transferable? a revealed preference analysis

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Author Info

  • Cherchye, Laurens

    ()
    (Center for Economic Studies, University of Leuven)

  • Demuynck, Thomas

    ()
    (Department of Economics, University of Maastricht)

  • De Rock, Bram

    ()
    (Ecares, Université Libre de Bruxelles)

Abstract

The transferable utility hypothesis underlies important theoretical results in household economics. We provide a revealed preference framework for bringing this (theoretically appealing) hypothesis to observational data. We establish revealed preference conditions that must be satisfied for observed household consumption behavior to be consistent with transferable utility. We also show that these conditions are testable by means of integer programming methods.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): (Forthcoming)
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Handle: RePEc:the:publsh:1560

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Web page: http://econtheory.org

Related research

Keywords: Transferable utility hypothesis; generalized quasi-linearity; household consump- tion; nonparametric tests; revealed preferences;

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References

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  1. Cherchye, L.J.H. & Rock, B. de & Vermeulen, F.M.P., 2011. "The revealed preference approach to collective consumption behavior: Testing and sharing rule recovery," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3857700, Tilburg University.
  2. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK, 2011. "Is utility transferable? A revealed preference analysis," Center for Economic Studies - Discussion papers ces11.02, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  3. Laurens CHERCHYE & Ian CRAWFORD & Bram DE ROCK & Frederic VERMEULEN, 2011. "Aggregation without the aggravation? Nonparametric analysis of the representative consumer," Center for Economic Studies - Discussion papers ces11.36, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  4. Donald J. Brown & Caterina Calsamiglia, 2005. "The Nonparametric Approach to Applied Welfare Analysis," Cowles Foundation Discussion Papers 1507, Cowles Foundation for Research in Economics, Yale University.
  5. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
  6. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-59, October.
  7. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-65, November.
  8. Bergstrom, Theodore C. & Cornes, Richard C., 1981. "Gorman and Musgrave are dual : An Antipodean theorem on public goods," Economics Letters, Elsevier, vol. 7(4), pages 371-378.
  9. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2007. "The Collective Model of Household Consumption: A nonparametric characterization," ULB Institutional Repository 2013/98559, ULB -- Universite Libre de Bruxelles.
  10. Varian, Hal R., 1988. "Revealed preference with a subset of goods," Journal of Economic Theory, Elsevier, vol. 46(1), pages 179-185, October.
  11. Chiappori, Pierre-Andre, 2010. "Testable implications of transferable utility," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1302-1317, May.
  12. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  13. Bergstrom, Theodore C. & Varian, Hal R., 1985. "When do market games have transferable utility?," Journal of Economic Theory, Elsevier, vol. 35(2), pages 222-233, August.
  14. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  15. Diewert, W E, 1973. "Afriat and Revealed Preference Theory," Review of Economic Studies, Wiley Blackwell, vol. 40(3), pages 419-25, July.
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Citations

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Cited by:
  1. Cherchye, L.J.H. & Demuynck, T. & Rock, B. de, 2011. "Is Utility Transferable? A Revealed Preference Analysis," Discussion Paper 2011-018, Tilburg University, Center for Economic Research.
  2. Laurens CHERCHYE & Thomas DEMUYNCK & Bram DE ROCK & Frederic VERMEULEN, 2014. "Household consumption when the marriage is stable," Center for Economic Studies - Discussion papers ces14.08, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.

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