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Heuristics for deciding collectively rational consumption behavior

Author

Listed:
  • Fabrice Talla Nobibon
  • Laurens Cherchye
  • Bram De Rock
  • Jeroen Sabbe
  • Frits C.R. Spieksma

Abstract

We consider the computational problem of testing whether observed household consumption behavior satisfies the Collective Axiom of Revealed Preferences (CARP). We propose a graph such that the existence of a node-partitioning giving rise to two induced subgraphs that are acyclic implies that the data satisfy CARP. Furthermore, we propose and implement heuristics that are quite fast, that can be used to check reasonably large datasets for CARP and that can be of particular interest when used prior to computationally demanding approaches. Finally, from the computational results we conclude that these heuristics can be effective in testing CARP.

Suggested Citation

  • Fabrice Talla Nobibon & Laurens Cherchye & Bram De Rock & Jeroen Sabbe & Frits C.R. Spieksma, 2008. "Heuristics for deciding collectively rational consumption behavior," Working Papers of Department of Economics, Leuven ces0824, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:ces0824
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    Cited by:

    1. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    2. Thomas Demuynck, 2014. "The computational complexity of rationalizing Pareto optimal choice behavior," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 42(3), pages 529-549, March.
    3. 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.
    4. Smeulders, Bart & Cherchye, Laurens & De Rock, Bram & Spieksma, Frits C.R. & Talla Nobibon, Fabrice, 2015. "Complexity results for the weak axiom of revealed preference for collective consumption models," Journal of Mathematical Economics, Elsevier, vol. 58(C), pages 82-91.
    5. Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram, 2011. "Testable implications of general equilibrium models: An integer programming approach," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 564-575.
    6. Fabrice Talla Nobibon & Laurens Cherchye & Yves Crama & Thomas Demuynck & Bram De Rock & Frits C. R. Spieksma, 2016. "Revealed Preference Tests of Collectively Rational Consumption Behavior: Formulations and Algorithms," Operations Research, INFORMS, vol. 64(6), pages 1197-1216, December.
    7. Mark Dean & Daniel Martin, 2011. "Testing for Rationality with Consumption Data: Demographics and Heterogeneity," Working Papers 2011-11, Brown University, Department of Economics.
    8. Sam Cosaert, 2019. "What Types are There?," Computational Economics, Springer;Society for Computational Economics, vol. 53(2), pages 533-554, February.
    9. Fabrice Talla Nobibon & Cor A. J. Hurkens & Roel Leus & Frits C. R. Spieksma, 2012. "Coloring Graphs Using Two Colors While Avoiding Monochromatic Cycles," INFORMS Journal on Computing, INFORMS, vol. 24(3), pages 485-499, August.

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