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Revealed preference analysis for convex rationalizations on nonlinear budget sets

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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 set on nonlinear budget sets is consistent with the maximization of a quasi–concave utility function. Our results can be used to test for convexity of the underlying preference relation. We also show that in many settings, 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 of Department of Economics, Leuven ces12.15, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
  • Handle: RePEc:ete:ceswps:ces12.15
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    References listed on IDEAS

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    10. Charles F. Manski, 2014. "Identification of income–leisure preferences and evaluation of income tax policy," Quantitative Economics, Econometric Society, vol. 5, pages 145-174, March.
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    14. repec:ecj:econjl:v:122:y:2012:i::p:305-331 is not listed on IDEAS
    15. repec:dau:papers:123456789/4099 is not listed on IDEAS
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    Cited by:

    1. Ian Crawford & Bram De Rock, 2014. "Empirical Revealed Preference," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 503-524, August.
    2. Polisson, Matthew & Renou, Ludovic, 2016. "Afriat’s Theorem and Samuelson’s ‘Eternal Darkness’," Journal of Mathematical Economics, Elsevier, vol. 65(C), pages 36-40.
    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. 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.
    5. 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.
    6. Dong, Xueqi & Liu, Shuo Li, 2021. "Proportional Tax under Ambiguity," MPRA Paper 107668, University Library of Munich, Germany.
    7. Demuynck, Thomas & Hjertstrand, Per, 2019. "Samuelson's Approach to Revealed Preference Theory: Some Recent Advances," Working Paper Series 1274, Research Institute of Industrial Economics.

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    More about this item

    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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