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On Testing the Utility Hypothesis

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  • Cox, James C

Abstract

In order to be able to conduct a test of the (core) utility hypothesis that is not confounded with tests of (subsidiary) hypotheses that economic agents all have the same preferences and that their preferences are weakly separable, it is necessary to use data that are disaggregated and complete. In order to carry out a utility hypothesis test with complete data, revealed preference theory must first be extended. The generalized axiom of revealed preference is extended to include labor supply and portfolio choice. Then a complete, disaggregated data set is used to test the utility hypothesis and two preference separability hypotheses. Copyright 1997 by Royal Economic Society.

Suggested Citation

  • Cox, James C, 1997. "On Testing the Utility Hypothesis," Economic Journal, Royal Economic Society, vol. 107(443), pages 1054-1078, July.
  • Handle: RePEc:ecj:econjl:v:107:y:1997:i:443:p:1054-78
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    Cited by:

    1. Sam Cosaert & Thomas Demuynck, 2015. "Revealed preference theory for finite choice sets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 169-200, May.
    2. Philippe Février & Michael Visser, 2004. "A Study of Consumer Behavior Using Laboratory Data," Experimental Economics, Springer;Economic Science Association, vol. 7(1), pages 93-114, February.
    3. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram & Hjertstrand, Per, 2015. "Revealed preference tests for weak separability: An integer programming approach," Journal of Econometrics, Elsevier, vol. 186(1), pages 129-141.
    4. Sabrina Bruyneel & Laurens Cherchye & Sam Cosaert & Bram De Rock & Siegfried Dewitte, 2012. "Are the Smart Kids More Rational ?," Working Papers ECARES ECARES 2012-050, ULB -- Universite Libre de Bruxelles.
    5. Cox, James C., 2010. "Some issues of methods, theories, and experimental designs," Journal of Economic Behavior & Organization, Elsevier, vol. 73(1), pages 24-28, January.
    6. Jim Engle-Warnick & Natalia Mishagina, 2014. "Insensitivity to Prices in a Dictator Game," CIRANO Working Papers 2014s-19, CIRANO.
    7. Maja Adena & Steffen Huck & Imran Rasul, 2017. "Testing consumer theory: evidence from a natural field experiment," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(2), pages 89-108, December.
    8. Laurens Cherchye & Frederic Vermeulen, 2008. "Nonparametric Analysis of Household Labor Supply: Goodness of Fit and Power of the Unitary and the Collective Model," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 267-274, May.
    9. Samiran Banerjee & James Murphy, 2009. "A simplified test for preference rationality of two-commodity choice," Experimental Economics, Springer;Economic Science Association, vol. 12(2), pages 252-252, June.
    10. Raymond Fisman & Shachar Kariv & Daniel Markovits, 2007. "Individual Preferences for Giving," American Economic Review, American Economic Association, vol. 97(5), pages 1858-1876, December.
    11. Jens Hougaard & Tue Tjur & Lars Østerdal, 2012. "On the meaningfulness of testing preference axioms in stated preference discrete choice experiments," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(4), pages 409-417, August.
    12. repec:eee:jetheo:v:169:y:2017:i:c:p:546-550 is not listed on IDEAS
    13. Andreoni,J. & Harbaugh,W.T., 2005. "Power indices for revealed preference tests," Working papers 10, Wisconsin Madison - Social Systems.
    14. Jan Heufer, 2013. "Testing revealed preferences for homotheticity with two-good experiments," Experimental Economics, Springer;Economic Science Association, vol. 16(1), pages 114-124, March.
    15. Syngjoo Choi & Raymond Fisman & Douglas Gale & Shachar Kariv, 2007. "Substantive and Procedural Rationality in Decisions under Uncertainty," Levine's Bibliography 122247000000000946, UCLA Department of Economics.
    16. Moscati, Ivan & Tubaro, Paola, 2009. "Random behavior and the as-if defense of rational choice theory in demand experiments," LSE Research Online Documents on Economics 27001, London School of Economics and Political Science, LSE Library.
    17. Steven Gjerstad, 2013. "Price dynamics in an exchange economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 461-500, March.
    18. Alkire, Sabina, 2002. "Dimensions of Human Development," World Development, Elsevier, vol. 30(2), pages 181-205, February.
    19. Per Hjertstrand & James Swofford, 2014. "Are the choices of people stochastically rational? A stochastic test of the number of revealed preference violations," Empirical Economics, Springer, vol. 46(4), pages 1495-1519, June.
    20. Steven Gjerstad, 2004. "Market Dynamics in Edgeworth Exchange," Microeconomics 0401006, EconWPA.
    21. Brocas, Isabelle & Carrillo, Juan D & Combs, T. Dalton & Kodaverdian, Niree, 2015. "Consistency in Simple vs. Complex Choices over the Life Cycle," CEPR Discussion Papers 10457, C.E.P.R. Discussion Papers.
    22. David Dickinson, 2000. "Ultimatum decision-making: A test of reciprocal kindness," Theory and Decision, Springer, vol. 48(2), pages 151-177, March.
    23. Jan Heufer & Paul van Bruggen, 2016. "Afriat in the Lab," Tinbergen Institute Discussion Papers 16-095/I, Tinbergen Institute.
    24. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.

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