IDEAS home Printed from https://ideas.repec.org/p/mtl/montec/08-2004.html
   My bibliography  Save this paper

A Theory of Random Consumer Demand

Author

Listed:
  • McCAUSLAND, William J.

Abstract

This paper presents a new theory of random consumer demand. The primitive is a collection of probability distributions, rather than a binary preference. Various assumptions constrain these distributions, including analogues of common assumptions about preferences such as transitivity, monotonicity and convexity. Two results establish a complete representation of theoretically consistent random demand. The purpose of this theory of random consumer demand is application to empirical consumer demand problems. To this end, the theory has several desirable properties. It is intrinsically stochastic, so the econometrician can apply it directly without adding extrinsic randomness in the form of residuals. Random demand is parsimoniously represented by a single function on the consumption set. Finally, we have a practical method for statistical inference based on the theory, described in McCausland (2004), a companion paper.

Suggested Citation

  • McCAUSLAND, William J., 2004. "A Theory of Random Consumer Demand," Cahiers de recherche 08-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    • Handle: RePEc:mtl:montec:08-2004
    as

    Download full text from publisher

    File URL: http://www.cireqmontreal.com/wp-content/uploads/cahiers/08-2004-cah.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bandyopadhyay, Taradas & Dasgupta, Indraneel & Pattanaik, Prasanta K., 1999. "Stochastic Revealed Preference and the Theory of Demand," Journal of Economic Theory, Elsevier, vol. 84(1), pages 95-110, January.
    2. 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.
    3. Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140.
    4. McCAUSLAND, William J., 2004. "A Theory of Random Consumer Demand," Cahiers de recherche 08-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    5. Barbera, Salvador & Pattanaik, Prasanta K, 1986. "Falmagne and the Rationalizability of Stochastic Choices in Terms of Random Orderings," Econometrica, Econometric Society, vol. 54(3), pages 707-715, May.
    6. Zinde-Walsh, Victoria, 1995. "ESTIMATION AND INFERENCE IN ECONOMETRICSRussell Davidson and James G. MacKinnon Oxford University Press, 1993," Econometric Theory, Cambridge University Press, vol. 11(3), pages 631-635, June.
    7. Sattath, Shmuel & Tversky, Amos, 1976. "Unite and Conquer: A Multiplicative Inequality for Choice Probabilities," Econometrica, Econometric Society, vol. 44(1), pages 79-89, January.
    8. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
    9. McFadden, Daniel, 1974. "The measurement of urban travel demand," Journal of Public Economics, Elsevier, vol. 3(4), pages 303-328, November.
    10. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
    11. Gerard Debreu, 1957. "Stochastic Choice and Cardinal Utility," Cowles Foundation Discussion Papers 39, Cowles Foundation for Research in Economics, Yale University.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. McCAUSLAND, William J., 2004. "A Theory of Random Consumer Demand," Cahiers de recherche 08-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    2. Daniel McFadden, 2005. "Revealed stochastic preference: a synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(2), pages 245-264, August.
    3. McCausland, William J., 2008. "On Bayesian analysis and computation for functions with monotonicity and curvature restrictions," Journal of Econometrics, Elsevier, vol. 142(1), pages 484-507, January.
    4. 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.
    5. WILLIAM J. McCAUSLAND, 2009. "Random Consumer Demand," Economica, London School of Economics and Political Science, vol. 76(301), pages 89-107, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. WILLIAM J. McCAUSLAND, 2009. "Random Consumer Demand," Economica, London School of Economics and Political Science, vol. 76(301), pages 89-107, February.
    2. Sam Cosaert & Thomas Demuynck, 2018. "Nonparametric Welfare and Demand Analysis with Unobserved Individual Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 100(2), pages 349-361, May.
    3. McCAUSLAND, William, 2004. "Bayesian Analysis for a Theory of Random Consumer Demand: The Case of Indivisible Goods," Cahiers de recherche 2004-05, Universite de Montreal, Departement de sciences economiques.
    4. McCausland, William J., 2008. "On Bayesian analysis and computation for functions with monotonicity and curvature restrictions," Journal of Econometrics, Elsevier, vol. 142(1), pages 484-507, January.
    5. T.R.L. Fry & R.D. Brooks & Br. Comley & J. Zhang, 1993. "Economic Motivations for Limited Dependent and Qualitative Variable Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 193-205, June.
    6. Bandyopadhyay, Taradas & Bandyopadhyay, Bandyopadhyay & Pattanaik, Prasanta K., 2002. "Demand Aggregation and the Weak Axiom of Stochastic Revealed Preference," Journal of Economic Theory, Elsevier, vol. 107(2), pages 483-489, December.
    7. Gregory Price, 2008. "Hurricane Katrina: Was There a Political Economy of Death?," The Review of Black Political Economy, Springer;National Economic Association, vol. 35(4), pages 163-180, December.
    8. Rolf Aaberge & Ugo Colombino, 2014. "Labour Supply Models," Contributions to Economic Analysis, in: Handbook of Microsimulation Modelling, volume 127, pages 167-221, Emerald Group Publishing Limited.
    9. Jeff Borland, 1987. "The Demand for Australian Rules Football," The Economic Record, The Economic Society of Australia, vol. 63(3), pages 220-230, September.
    10. Marco Caliendo & Frank Fossen & Alexander Kritikos, 2014. "Personality characteristics and the decisions to become and stay self-employed," Small Business Economics, Springer, vol. 42(4), pages 787-814, April.
    11. Mora Rodriguez, Jhon James, 2013. "Introduccion a la teoría del consumidor [Introduction to Consumer Theory]," MPRA Paper 48129, University Library of Munich, Germany, revised 08 Jul 2013.
    12. Indraneel Dasgupta, 2011. "Contraction consistent stochastic choice correspondence," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(4), pages 643-658, October.
    13. Hensher, David A., 2007. "Bus transport: Economics, policy and planning," Research in Transportation Economics, Elsevier, vol. 18(1), pages 1-507, January.
    14. Javier A. Birchenall, 2024. "Random choice and market demand," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(1), pages 165-198, February.
    15. Dasgupta Indraneel & Pattanaik P. K, 2010. "Revealed Preference with Stochastic Demand Correspondence," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-21, August.
    16. Shasikanta Nandeibam, 2009. "On probabilistic rationalizability," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(3), pages 425-437, March.
    17. Rolf Aaberge & Ugo Colombino, 2018. "Structural Labour Supply Models and Microsimulation," International Journal of Microsimulation, International Microsimulation Association, vol. 11(1), pages 162-197.
    18. Zepeda, Lydia, 1991. "Simultaneity of Technology Adoption and Productivity," Staff Papers 200536, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    19. Matthew Polisson, 2018. "A lattice test for additive separability," IFS Working Papers W18/08, Institute for Fiscal Studies.
    20. Dieter Saelens, 2022. "Unitary or collective households? A nonparametric rationality and separability test using detailed data on consumption expenditures and time use," Empirical Economics, Springer, vol. 62(2), pages 637-677, February.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mtl:montec:08-2004. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sharon BREWER (email available below). General contact details of provider: https://edirc.repec.org/data/cdmtlca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.