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A Comment on Revealed Preference with a Subset of Goods

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  • Paul van Bruggen

    (Erasmus University Rotterdam, the Netherlands)

Abstract

Varian (1988) introduced an important proposition regarding restrictions on consumption data if observations of the quantities of a good are missing. In this paper, a simple counterexample is presented to show that the original proof is incorrect, and a new proof is provided. The new proof is not based on choosing the missing quantities such that some bundles are revealed preferred to others, but rather on choosing the unknown quantities such that bundles are not revealed preferred to any bundle with a higher index.

Suggested Citation

  • Paul van Bruggen, 2016. "A Comment on Revealed Preference with a Subset of Goods," Tinbergen Institute Discussion Papers 16-068/I, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20160068
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    File URL: https://papers.tinbergen.nl/16068.pdf
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    References listed on IDEAS

    as
    1. Andrés Carvajal & Rahul Deb & James Fenske & John K.‐H. Quah, 2013. "Revealed Preference Tests of the Cournot Model," Econometrica, Econometric Society, vol. 81(6), pages 2351-2379, November.
    2. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-973, July.
    3. repec:ecj:econjl:v:122:y:2012:i::p:332-338 is not listed on IDEAS
    4. Varian, Hal R., 1988. "Revealed preference with a subset of goods," Journal of Economic Theory, Elsevier, vol. 46(1), pages 179-185, October.
    5. Ian Crawford, 2010. "Habits Revealed," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1382-1402.
    6. Hanoch, Giora & Rothschild, Michael, 1972. "Testing the Assumptions of Production Theory: A Nonparametric Approach," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 256-275, March-Apr.
    7. Hal R. Varian, 2012. "Revealed Preference and its Applications," Economic Journal, Royal Economic Society, vol. 122(560), pages 332-338, May.
    8. Browning, Martin, 1989. "A Nonparametric Test of the Life-Cycle Rational Expectations Hypothesis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 979-992, November.
    9. Varian, Hal R, 1984. "The Nonparametric Approach to Production Analysis," Econometrica, Econometric Society, vol. 52(3), pages 579-597, May.
    10. W. E. Diewert, 1973. "Afriat and Revealed Preference Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(3), pages 419-425.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. van Bruggen, Paul & Heufer, Jan, 2017. "Afriat in the lab," Journal of Economic Theory, Elsevier, vol. 169(C), pages 546-550.

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    More about this item

    Keywords

    Nonparametric analysis; revealed preference; missing observations; GARP;
    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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