A Simple Method to Account for Measurement Errors in Revealed Preference Tests

19 Pages Posted: 15 Jul 2014

See all articles by Per Hjertstrand

Per Hjertstrand

Research Institute of Industrial Economics (IFN)

Date Written: November 21, 2013

Abstract

Revealed preference tests are widely used in empirical applications of consumer rationality. These are static tests, and consequently, lack ability to handle measurement errors in the data. This paper extends and generalizes existing procedures that account for measurement errors in revealed preference tests. In particular, it introduces a very efficient method to implement these procedures, which make them operational for large data sets. The paper illustrates the new method for both classical and Berkson measurement errors models.

Keywords: Berkson measurement errors; Classical measurement errors; GARP; Revealed preference

JEL Classification: C43; D12

Suggested Citation

Hjertstrand, Per, A Simple Method to Account for Measurement Errors in Revealed Preference Tests (November 21, 2013). IFN Working Paper No. 990, Available at SSRN: https://ssrn.com/abstract=2466339 or http://dx.doi.org/10.2139/ssrn.2466339

Per Hjertstrand (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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