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A Comprehensive Approach to Revealed Preference Theory

Author

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  • Hiroki Nishimura
  • Efe A. Ok
  • John K.-H. Quah

Abstract

We develop a version of Afriat's theorem that is applicable in a variety of choice environments beyond the setting of classical consumer theory. This allows us to devise tests for rationalizability in environments where the set of alternatives is not the positive orthant of a Euclidean space and where the rationalizing utility function is required to satisfy properties appropriate to that environment. We show that our results are applicable, amongst others, to choice data on lotteries, contingent consumption, and intertemporal consumption.

Suggested Citation

  • Hiroki Nishimura & Efe A. Ok & John K.-H. Quah, 2017. "A Comprehensive Approach to Revealed Preference Theory," American Economic Review, American Economic Association, vol. 107(4), pages 1239-1263, April.
  • Handle: RePEc:aea:aecrev:v:107:y:2017:i:4:p:1239-63
    Note: DOI: 10.1257/aer.20150947
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    References listed on IDEAS

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    Cited by:

    1. Matthew Polisson & John Quah & Ludovic Renou, 2015. "Revealed preferences over risk and uncertainty," IFS Working Papers W15/25, Institute for Fiscal Studies.
    2. Georgios Gerasimou, 2016. "Asymmetric dominance, deferral, and status quo bias in a behavioral model of choice," Theory and Decision, Springer, vol. 80(2), pages 295-312, February.
    3. Guney, Begum & Richter, Michael, 2015. "An experiment on aspiration-based choice," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 512-526.
    4. Georgios Gerasimou, 2016. "Partially dominant choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 61(1), pages 127-145, January.
    5. Sürücü, Oktay, 2016. "Welfare improving discrimination based on cognitive limitations," Research in Economics, Elsevier, vol. 70(4), pages 608-622.
    6. Shaofang Qi, 2016. "A characterization of the n-agent Pareto dominance relation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(3), pages 695-706, March.
    7. Fabio Galeotti & Maria Montero & Anders Poulsen, 2017. "The attraction and compromise effects in bargaining: Experimental evidence," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 17-04, School of Economics, University of East Anglia, Norwich, UK..
    8. Hassan Nosratabadi, 2017. "Rational Filters," Departmental Working Papers 201706, Rutgers University, Department of Economics.
    9. Dino Borie & Dorian Jullien, 2017. "Description-dependent Choices," Working Papers halshs-01651086, HAL.
    10. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Khushboo Surana, 2018. "Revealed Preference Analysis with Normal Goods: Application to Cost of Living Indices," Working Papers ECARES 2018-08, ULB -- Universite Libre de Bruxelles.
    11. Buturak, Gökhan & Evren, Özgür, 2017. "Choice overload and asymmetric regret," Theoretical Economics, Econometric Society, vol. 12(3), September.
    12. repec:spr:sochwe:v:50:y:2018:i:1:d:10.1007_s00355-017-1077-1 is not listed on IDEAS
    13. Lamiraud, Karine & Oxoby, Robert & Donaldson, Cam, 2016. "Reference Dependence and Incremental WTP," ESSEC Working Papers WP1609, ESSEC Research Center, ESSEC Business School.
    14. Mauricio Ribeiro & Gil Riella, 2017. "Regular preorders and behavioral indifference," Theory and Decision, Springer, vol. 82(1), pages 1-12, January.
    15. Ronayne, David & Brown, Gordon D.A., 2016. "Multi-attribute decision by sampling: An account of the attraction, comprimise and similarity effects," The Warwick Economics Research Paper Series (TWERPS) 1124, University of Warwick, Department of Economics.
    16. Hassan Nosratabadi, 2017. "Referential Revealed Preference Theory," Departmental Working Papers 201705, Rutgers University, Department of Economics.
    17. Anujit Chakraborty & Evan M. Calford & Guidon Fenig & Yoram Halevy, 2017. "External and internal consistency of choices made in convex time budgets," Experimental Economics, Springer;Economic Science Association, vol. 20(3), pages 687-706, September.
    18. Fabrizi, Simona & Lippert, Steffen & Puppe, Clemens & Rosenkranz, Stephanie, 2016. "Manufacturer suggested retail prices, loss aversion and competition," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 141-153.
    19. repec:eee:mateco:v:71:y:2017:i:c:p:63-73 is not listed on IDEAS
    20. repec:eee:jeborg:v:143:y:2017:i:c:p:165-172 is not listed on IDEAS
    21. Nishimura, Hiroki & Ok, Efe A., 2016. "Utility representation of an incomplete and nontransitive preference relation," Journal of Economic Theory, Elsevier, vol. 166(C), pages 164-185.
    22. repec:eee:jetheo:v:169:y:2017:i:c:p:603-628 is not listed on IDEAS
    23. Nocke, Volker & Schutz, Nicolas, 2017. "Quasi-linear integrability," Journal of Economic Theory, Elsevier, vol. 169(C), pages 603-628.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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