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Testing The Significance Of The Departures From Utility Maximization

Author

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  • Philippe de Peretti

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper introduces a general procedure that tests the significance of the departures from utility maximization, departures defined as violations of the general axiom of revealed preference (GARP). This general procedure is based on (i) an adjustment procedure that computes the minimal perturbation in order to satisfy GARP by using the information content in the transitive closure matrix and (ii) a test procedure that checks the significance of the necessary adjustment. This procedure can be easily implemented and programmed, and we run Monte Carlo simulations to show that it is quite powerful.

Suggested Citation

  • Philippe de Peretti, 2005. "Testing The Significance Of The Departures From Utility Maximization," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00646801, HAL.
  • Handle: RePEc:hal:cesptp:halshs-00646801
    DOI: 10.1017/S1365100505040241
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00646801
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    Cited by:

    1. Ryadh M. Alkhareif & William Barnett, 2012. "Divisia Monetary Aggregates for the GCC Countries," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201209, University of Kansas, Department of Economics, revised Aug 2012.
    2. Matthijs van Veelen & Roy van der Weide, 2008. "A Note on Different Approaches to Index Number Theory," American Economic Review, American Economic Association, vol. 98(4), pages 1722-1730, September.
    3. repec:eee:ejores:v:272:y:2019:i:3:p:803-815 is not listed on IDEAS
    4. repec:wsi:wsbook:6875 is not listed on IDEAS
    5. repec:eee:jimfin:v:89:y:2018:i:c:p:127-138 is not listed on IDEAS
    6. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.

    More about this item

    Keywords

    weak separability; nonparametric; test;

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