Heuristics for Deciding Collectively Rational Consumption Behavior

30 Pages Posted: 28 Oct 2008

See all articles by F. Talla Nobibon

F. Talla Nobibon

HEC-Management School, University of Liège

L. Cherchye

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)

Jeroen Sabbe

K.U. Leuven Campus Kortrijk - Subfaculty of Business and Economics; K.U. Leuven - Faculty of Business and Economics

Frits Spieksma

Catholic University of Leuven (KUL)

Date Written: August 2008

Abstract

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.

Keywords: Collective model of household consumption, Collective Axiom of Revealed Preference, Pareto efficiency, Directed graph, Graph coloring, Graph partitioning, Acyclic subgraph, Heuristics

Suggested Citation

Talla Nobibon, Fabrice and Cherchye, Laurens and De Rock, Bram and Sabbe, Jeroen and Spieksma, Frits, Heuristics for Deciding Collectively Rational Consumption Behavior (August 2008). Available at SSRN: https://ssrn.com/abstract=1291124 or http://dx.doi.org/10.2139/ssrn.1291124

Fabrice Talla Nobibon (Contact Author)

HEC-Management School, University of Liège ( email )

Rue Louvrex 14/ Building N1/
Liège, Liège B-4000
Belgium

Laurens Cherchye

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant
Belgium

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Bram De Rock

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Av. F. D. Roosevelt, 50
CP 114
Brussels, B-1050
Belgium

Jeroen Sabbe

K.U. Leuven Campus Kortrijk - Subfaculty of Business and Economics ( email )

Etienne Sabbelaan 53
Kortrijk, West-Vlaanderen 8500
Belgium

HOME PAGE: http://www.econ.kuleuven.be/jeroen.sabbe

K.U. Leuven - Faculty of Business and Economics

Naamsestraat 69
Leuven, B-3000
Belgium

HOME PAGE: http://www.econ.kuleuven.be/jeroen.sabbe

Frits Spieksma

Catholic University of Leuven (KUL) ( email )

Leuven, B-3000
Belgium

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