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Revealed Preference Analysis for Convex Rationalizations on Nonlinear Budget Sets

Author

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  • Laurens Cherchye
  • Thomas Demuynck
  • Bram De Rock

Abstract

We present necessary and sufficient revealed preference conditions to verify whether a finite data seton nonlinear budget sets is consistent with the maximization of a quasi–concave utility function. Ourresults can be used to test for convexity of the underlying preference relation. We also show that in manysettings, our conditions are easy to use in practical applications.

Suggested Citation

  • Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2012. "Revealed Preference Analysis for Convex Rationalizations on Nonlinear Budget Sets," Working Papers ECARES ECARES 2012-044, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/133538
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    References listed on IDEAS

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    7. Demuynck, Thomas, 2009. "A general extension result with applications to convexity, homotheticity and monotonicity," Mathematical Social Sciences, Elsevier, vol. 57(1), pages 96-109, January.
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    Citations

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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. Dong, Xueqi & Liu, Shuo Li, 2021. "Proportional Tax under Ambiguity," MPRA Paper 107668, University Library of Munich, Germany.
    3. Ian Crawford & Bram De Rock, 2014. "Empirical Revealed Preference," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 503-524, August.
    4. Polisson, Matthew & Renou, Ludovic, 2016. "Afriat’s Theorem and Samuelson’s ‘Eternal Darkness’," Journal of Mathematical Economics, Elsevier, vol. 65(C), pages 36-40.
    5. Demuynck, Thomas & Hjertstrand, Per, 2019. "Samuelson's Approach to Revealed Preference Theory: Some Recent Advances," Working Paper Series 1274, Research Institute of Industrial Economics.
    6. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2014. "Revealed preference analysis for convex rationalizations on nonlinear budget sets," Journal of Economic Theory, Elsevier, vol. 152(C), pages 224-236.
    7. Khushboo Surana, 2022. "How different are we? Identifying the degree of revealed preference heterogeneity," Discussion Papers 22/09, Department of Economics, University of York.
    8. Smeulders, Bart & Crama, Yves & Spieksma, Frits C.R., 2019. "Revealed preference theory: An algorithmic outlook," European Journal of Operational Research, Elsevier, vol. 272(3), pages 803-815.

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    More about this item

    Keywords

    quasi-concavity; convex preferences; nonlinear budget sets; revealed preference conditions;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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