On a System of Inequalities in Demand Analysis: An Extension of the Classical Method

Afriat, S. N.

doi:10.2307/2525934

Cited by 231 publications

(201 citation statements)

References 4 publications

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“…The extended condition accounts for optimization errors in the Collective consumption models with restricted bargaining weights 399 following way: it requires 'nearly' optimizing behavior rather than 'exactly' optimizing behavior (see Afriat 1973;Varian 1990 on the usefulness of considering such nearly optimizing behavior in empirical revealed preference analysis). Formally, the extended version of the rationality condition uses e 2 ½0; 1 ; and replaces (2) by…”

Section: Unitary Rationalitymentioning

confidence: 99%

Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data

2011

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We use experimental data to analyze consumption decisions by groups of individuals who have to reach a consensus on spending a joint budget. Our experiment involves dyads (i.e. two-member groups) who have to compose consumption bundles consisting of three commodities (wine, orange juice and M&Ms). We focus on the collective consumption model to describe group behavior. This model represents group decisions as Pareto optimal outcomes of a within-group bargaining process, with rational group members who are each characterized by individual bargaining weights. We also consider specifications of the collective model that restrict the variation of these bargaining weights. A distinguishing feature of our study is that we use revealed preference testing tools to assess the goodness-of-fit and discriminatory power of alternative specifications of the collective model. Our experimental results suggest that the most appropriate model specification allows for a limited variation of the bargaining weights. This is a substantially revised and reoriented version of the paper that has been circulating under the title ''How to model collective decisions? Evidence from a laboratory experiment. S. BruyneelMarketing and Organisation Studies,

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Section: Unitary Rationalitymentioning

confidence: 99%

Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data

2011

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“…In this case, therefore, the possibility of conducting welfare analysis from revealed choices is not immediate. 1 As with the empirical findings see, respectively, Tversky and Kahneman (1981), Tversky and Simonson (1993), Thaler (1980), May (1954), and Iyengar and Lepper (2000). Some theoretical accounts inspired by the above findings expanding the classical notion of rationality and adopting a revealed preference approach are Bossert and Sprumont (2003), Masatlioglu and Ok (2005), Manzini and Mariotti (2007), Salant and Rubinstein (2008), Masatlioglu and Nakajima (2008), and Masatlioglu, Nakajima and Ozbay (2009).…”

Section: Introductionmentioning

confidence: 77%

“…Some phenomena that have attracted a great deal of attention, both empirical and theoretical, and prove difficult, if not impossible, to accommodate within the classical maximization principle are framing effects, menu effects, the importance of reference points, cyclic choice patterns, choice overload effects, etc. 1 The violation in some instances of the principle of maximization raises at least two important questions: Q.1: how severe are the deviations from the classical theory? Q.2: what is the best way to extract relevant information from the choices of the individual for the purposes of welfare analysis.…”

Section: Introductionmentioning

confidence: 99%

A Measure of Rationality and Welfare

Apesteguía

Ballester

2015

Journal of Political Economy

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Abstract. There is ample evidence to show that choice behavior often deviates from the classical principle of maximization. This evidence raises at least two important questions: (i) how severe the deviation is and (ii) which method is the best for extracting relevant information from the choices of the individual for the purposes of welfare analysis. In this paper we address these two questions by proposing a set of foundational conditions on which to build a proper measure of the rationality of individuals, and enable individual welfare analysis of potentially inconsistent subjects, all based on standard revealed preference data. In our first result, we show that there is a unique measure of rationality that satisfies all of the proposed axioms: the weighted-loss indices. In the second part of the paper, we study some relevant properties of weighted-loss indices.

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“…The de…nition of RP( ) is akin to Afriat (1973) who suggests a similar modi…cation of (GA)RP to allow for waste ("partial e¢ ciency"). We can interpret as Afriat's so-called "e¢ ciency parameter": With = 1, no waste is allowed for; as decreases, the more waste we allow for; with = 0, any sequence of demand functions is rationalizable.…”

Section: A Revealed Preference (Rp) Restricted Sieve Estimatormentioning

confidence: 99%

“…We will instead use inequality restrictions derived from revealed preference theory to establish bounds on the distribution of demand responses. If consumers behave according to the axioms of revealed preference their demands will satisfy certain well known inequalities, see Afriat (1973). Varian (1982) uses these inequalities to characterise bounds on demand responses to new prices.…”

Section: Introductionmentioning

confidence: 99%

Bounding quantile demand functions using revealed preference inequalities

Blundell

Kristensen

Matzkin³

2014

Journal of Econometrics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper develops a new technique for the estimation of consumer demand models with unobserved heterogeneity subject to revealed preference inequality restrictions. Particular attention is given to nonseparable heterogeneity. The inequality restrictions are used to identify bounds on quantile demand functions. A nonparametric estimator for these bounds is developed and asymptotic properties are derived. An empirical application using data from the U.K. Family Expenditure Survey illustrates the usefulness of the methods by deriving bounds and con…dence sets for estimated quantile demand functions. Terms of use: Documents in EconStor may JEL: C20, D12

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On a System of Inequalities in Demand Analysis: An Extension of the Classical Method

Cited by 231 publications

References 4 publications

Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data

Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data

A Measure of Rationality and Welfare

Bounding quantile demand functions using revealed preference inequalities

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