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Homothetic preferences revealed

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  • Heufer, Jan
  • Hjertstrand, Per

Abstract

We introduce a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects’ preferences and to choose appropriate functional forms for parametric analysis. It has also various other uses such as improving applications of the money metric function or classifying choice data into different preference types. We illustrate some of those approaches using data from an experiment on social preferences.

Suggested Citation

  • Heufer, Jan & Hjertstrand, Per, 2019. "Homothetic preferences revealed," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 602-614.
    • Handle: RePEc:eee:jeborg:v:157:y:2019:i:c:p:602-614
    DOI: 10.1016/j.jebo.2018.10.018
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    1. Mikhail Freer & César Martinelli, 2023. "An algebraic approach to revealed preference," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(3), pages 717-742, April.

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    More about this item

    Keywords

    Graphical analysis; Homotheticity; Money metric utility; Recoverability; Revealed preference;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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