GARP violation, Economic Environment Distortions and Shadow Prices : Evidence from Household Expenditure Panel Data
AbstractThis paper contributes to the discussion of the compatibility of consumers' behavior in "real" life with GARP. Within expenditure panel data we observe a relatively low rate of violation (240 out of 3630 households). We show that these violations do not imply an "irrational" behavior of the agents, but can be attributed to a change in the agents' choice conditions during a period of time, which includes a shift from a centrally planned towards a market oriented economy.
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GARP; shadow prices.;
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