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Coarse revealed preference

Author

Listed:
  • Hu, Gaoji

    (School of Economics and Dishui Lake Advanced Finance Institute, Shanghai University of Finance and Economics)

  • Li, Jiangtao

    (School of Economics, Singapore Management University)

  • Quah, John K.-H.

    (Department of Economics, National University of Singapore)

  • Tang, Rui

    (Department of Economics, The Hong Kong University of Science and Technology)

Abstract

We propose a novel concept of rationalization, called coarse rationalization, tailored for the analysis of datasets where an agent's choices are imperfectly observed. We characterize those datasets which are rationalizable in this sense and present an efficient algorithm to verify the characterizing condition. We then demonstrate how our results can be applied through a duality approach to test the rationalizability of datasets with perfectly observed choices but imprecisely observed linear budget sets. For datasets that consist of both perfectly observed feasible sets and choices but are inconsistent with perfect rationality, our results could be used to measure the extent to which choices or prices have to be perturbed to recover rationality.

Suggested Citation

  • Hu, Gaoji & Li, Jiangtao & Quah, John K.-H. & Tang, Rui, 0. "Coarse revealed preference," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6410
    as

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    References listed on IDEAS

    as
    1. Forges, Françoise & Minelli, Enrico, 2009. "Afriat's theorem for general budget sets," Journal of Economic Theory, Elsevier, vol. 144(1), pages 135-145, January.
    2. 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.
    3. repec:dau:papers:123456789/4099 is not listed on IDEAS
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    Cited by:

    1. is not listed on IDEAS
    2. Carvajal, Andrés, 2024. "Recent advances on testability in economic equilibrium models," Journal of Mathematical Economics, Elsevier, vol. 114(C).

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    More about this item

    Keywords

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    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D0 - Microeconomics - - General
    • D1 - Microeconomics - - Household Behavior

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