Bayesian Analysis for a Theory of Random Consumer Demand: The Case of Indivisible Goods
AbstractMcCausland (2004a) describes a new theory of random consumer demand. Theoretically consistent random demand can be represented by a "regular" "L-utility" function on the consumption set X. The present paper is about Bayesian inference for regular L-utility functions. We express prior and posterior uncertainty in terms of distributions over the indefinite-dimensional parameter set of a flexible functional form. We propose a class of proper priors on the parameter set. The priors are flexible, in the sense that they put positive probability in the neighborhood of any L-utility function that is regular on a large subset bar(X) of X; and regular, in the sense that they assign zero probability to the set of L-utility functions that are irregular on bar(X). We propose methods of Bayesian inference for an environment with indivisible goods, leaving the more difficult case of indefinitely divisible goods for another paper. We analyse individual choice data from a consumer experiment described in Harbaugh et al. (2001).
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Bibliographic InfoPaper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 2004-05.
Length: 27 pages
Date of creation: 2004
Date of revision:
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More information through EDIRC
Consumer demand; Bayesian methods; Flexible functional Forms; Sha restrictions;
Other versions of this item:
- McCAUSLAND, William J., 2004. "Bayesian Analysis for a Theory of Random Consumer Demand: The Case of Indivisible Goods," Cahiers de recherche 10-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-31 (All new papers)
- NEP-DCM-2004-08-31 (Discrete Choice Models)
- NEP-MIC-2004-08-31 (Microeconomics)
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Cahiers de recherche
2004-04, Universite de Montreal, Departement de sciences economiques.
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