Non-parametric bounds for non-convex preferences

Yoram Halevy; Dotan Persitz; Lanny Zrill

doi:10.1016/j.jebo.2017.02.006

Non-parametric bounds for non-convex preferences

Yoram Halevy, Dotan Persitz^*, Lanny Zrill

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

5 Scopus citations

Abstract

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 predictions and welfare analysis. We suggest an alternative that is based solely on the assumption of monotonicity of preferences.

Original language	English
Pages (from-to)	105-112
Number of pages	8
Journal	Journal of Economic Behavior and Organization
Volume	137
DOIs	https://doi.org/10.1016/j.jebo.2017.02.006
State	Published - 1 May 2017
Externally published	Yes

Bibliographical note

Publisher Copyright:
© 2017 Elsevier B.V.

Keywords

Generalized axiom of revealed preference
Non-convex preferences
Partial identification
Revealed preferences

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10.1016/j.jebo.2017.02.006

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KW - Partial identification

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Non-parametric bounds for non-convex preferences

Abstract

Bibliographical note

Keywords

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