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Afriat's Theorem for Indivisible Goods

  • Francoise Forges
  • Vincent Iehlé

We identify a natural counterpart of the standard GARP for demand data in which goods are all indivisible. We show that the new axiom (DARP, for “discrete axiom of revealed preference”) is necessary and sufficient for the rationalization of the data by a well-behaved utility function. Our results complement the main finding of Polisson and Quah, Am. Econ. J.: Micro. 5(1) p.28-34 (2013), who rather minimally modify the original consumer problem with indivisible goods so that the standard GARP still applies.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-11/cesifo1_wp4498.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4498.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4498
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  1. Federico Echenique & Sangmok Lee & Matthew Shum, 2011. "The Money Pump as a Measure of Revealed Preference Violations," Journal of Political Economy, University of Chicago Press, vol. 119(6), pages 1201 - 1223.
  2. Forges, Françoise & Iehlé, Vincent, 2012. "Essential Data, Budget Sets and Rationalization," MPRA Paper 36519, University Library of Munich, Germany.
  3. Sam COSAERT & Thomas DEMUYNCK, 2013. "Revealed preference theory for finite choice sets," Center for Economic Studies - Discussion papers ces13.08, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  4. Francoise Forges & Enrico Minelli, 2006. "Afriat’s Theorem for General Budget Sets," CESifo Working Paper Series 1703, CESifo Group Munich.
  5. Anna Fostel & Herbert E. Scarf & Michael J. Todd, 2003. "Two New Proofs of Afriat's Theorem," Cowles Foundation Discussion Papers 1415, Cowles Foundation for Research in Economics, Yale University.
  6. Hammond, Peter & Traub, Stefan, 2012. "A Three-Stage Experimental Test of Revealed Preference," CAGE Online Working Paper Series 72, Competitive Advantage in the Global Economy (CAGE).
  7. Ivar Ekeland & Alfred Galichon, 2013. "The housing problem and revealed preference theory: duality and an application," Economic Theory, Springer, vol. 54(3), pages 425-441, November.
  8. Philippe Février & Michael Visser, 2000. "AStudyof Consumer Behavior Using Laboratory Data," Working Papers 2000-12, Centre de Recherche en Economie et Statistique.
  9. Donald J. Brown & Caterina Calsamiglia, 2005. "The Nonparametric Approach to Applied Welfare Analysis," Cowles Foundation Discussion Papers 1507, Cowles Foundation for Research in Economics, Yale University.
  10. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
  11. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
  12. Chambers, Christopher P. & Echenique, Federico, 2009. "Supermodularity and preferences," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1004-1014, May.
  13. Satoru Fujishige & Zaifu Yang, 2012. "On Revealed Preference and Indivisibilities," Discussion Papers 12/02, Department of Economics, University of York.
  14. Diewert, W E, 1973. "Afriat and Revealed Preference Theory," Review of Economic Studies, Wiley Blackwell, vol. 40(3), pages 419-25, July.
  15. Mattei, Aurelio, 2000. "Full-scale real tests of consumer behavior using experimental data," Journal of Economic Behavior & Organization, Elsevier, vol. 43(4), pages 487-497, December.
  16. Matthew Polisson & John Quah, 2012. "Revealed preference in a discrete consumption space," IFS Working Papers W12/03, Institute for Fiscal Studies.
  17. repec:spo:wpecon:info:hdl:2441/5rkqqmvrn4tl22s9mc0o6ctj2 is not listed on IDEAS
  18. Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140.
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