Heuristics for Deciding Collectively Rational Consumption Behavior
Fabrice Talla Nobibon
KU Leuven; HEC-Management School, University of Liège
KU Leuven; Erasmus Research Institute of Management (ERIM)
Bram De Rock
Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)
K.U. Leuven Campus Kortrijk - Subfaculty of Business and Economics; K.U. Leuven - Faculty of Business and Economics
Catholic University of Leuven (KUL)
We consider the computational problem of testing whether observed household consumption behavior satisfies the Collective Axiom of Revealed Preferences (CARP). We propose a graph such that the existence of a node-partitioning giving rise to two induced subgraphs that are acyclic implies that the data satisfy CARP. Furthermore, we propose and implement heuristics that are quite fast, that can be used to check reasonably large datasets for CARP and that can be of particular interest when used prior to computationally demanding approaches. Finally, from the computational results we conclude that these heuristics can be effective in testing CARP.
Number of Pages in PDF File: 30
Keywords: Collective model of household consumption, Collective Axiom of Revealed Preference, Pareto efficiency, Directed graph, Graph coloring, Graph partitioning, Acyclic subgraph, Heuristicsworking papers series
Date posted: October 28, 2008
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