Afriat's Theorem for Indivisible Goods
18 Pages Posted: 6 Dec 2013
Date Written: November 29, 2013
We identify a natural counterpart of the standard GARP for demand data in which goods are all indivisible. We show that the new axiom (DARP, for “discrete axiom of revealed preference”) is necessary and sufficient for the rationalization of the data by a well-behaved utility function. Our results complement the main finding of Polisson and Quah, Am. Econ. J.: Micro. 5(1) p.28-34 (2013), who rather minimally modify the original consumer problem with indivisible goods so that the standard GARP still applies.
Keywords: Afriat’s theorem, GARP, indivisible goods, rationalization, revealed preference
JEL Classification: D110, C810
Suggested Citation: Suggested Citation