Non-Parametric Bounds for Non-Convex Preferences
Choices from linear budget sets are often used to recover consumer's preferences. The classic method uses revealed preference theory to construct non-parametric bounds on the indifference curve that passes through a given bundle. We show that these bounds do not apply to non-convex preferences, and therefore may lead to erroneous prediction and welfare analysis. We suggest an alternative that is based on the assumption of monotonicity of preferences.
|Date of creation:||30 Dec 2015|
|Date of revision:||16 Oct 2016|
|Contact details of provider:|| Web page: http://www.economics.ubc.ca/|
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