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Revealed preference analysis for convex rationalizations on nonlinear budget sets

  • Laurens CHERCHYE
  • Thomas DEMUYNCK
  • Bram DE ROCK

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.

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File URL: http://feb.kuleuven.be/drc/Economics/research/dps-papers/dps12/dps1215.pdf
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Paper provided by KU Leuven, Faculty of Economics and Business, Department of Economics in its series Working Papers Department of Economics with number ces12.15.

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Date of creation: Nov 2012
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Handle: RePEc:ete:ceswps:ces12.15
Contact details of provider: Web page: http://feb.kuleuven.be/Economics/

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  1. W. Erwin Diewert, 2012. "Afriat's Theorem and some Extensions to Choice under Uncertainty," Economic Journal, Royal Economic Society, vol. 122(560), pages 305-331, 05.
  2. Herbert E. Scarf & Ana Fostel & Michael J. Todd, 2004. "Two New Proofs of Afriat's Theorem," Yale School of Management Working Papers ysm377, Yale School of Management.
  3. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
  4. 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.
  5. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, November.
  6. Matzkin, Rosa L, 1991. "Axioms of Revealed Preference for Nonlinear Choice Sets," Econometrica, Econometric Society, vol. 59(6), pages 1779-86, November.
  7. Yatchew, Adonis John, 1985. "A note on non-parametric tests of consumer behaviour," Economics Letters, Elsevier, vol. 18(1), pages 45-48.
  8. repec:ecj:econjl:v:122:y:2012:i::p:305-331 is not listed on IDEAS
  9. Rosa L. Matzkin & Marcel K. Richter, 1987. "Testing Strictly Concave Rationality," Cowles Foundation Discussion Papers 844, Cowles Foundation for Research in Economics, Yale University.
  10. Richter, Marcel K. & Wong, K.-C.Kam-Chau, 2004. "Concave utility on finite sets," Journal of Economic Theory, Elsevier, vol. 115(2), pages 341-357, April.
  11. Francoise Forges & Enrico Minelli, 2006. "Afriat’s Theorem for General Budget Sets," CESifo Working Paper Series 1703, CESifo Group Munich.
  12. repec:dau:papers:123456789/4099 is not listed on IDEAS
  13. Francoise Forges & Enrico Minelli, 2009. "Afriat's theorem for generalized budget sets," Post-Print hal-00360726, HAL.
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