Revealed Statistical Consumer Theory

34 Pages Posted: 2 Nov 2019

See all articles by Roy Allen

Roy Allen

University of Western Ontario - Department of Economics

Paweł Dziewulski

University of Oxford - Department of Economics

John Rehbeck

Ohio State University (OSU) - Economics

Date Written: October 22, 2019

Abstract

We investigate a model of deterministic stochastic choice for the standard consumer problem. We introduce the framework of statistical consumer theory where the individual maximizes their utility with respect to a distribution of bundles that is constrained by a statistic (e.g. mean expenditure). We show that this behavior is observationally equivalent to an individual whose preferences depend only on the statistic of the distribution. Statistical consumer theory neither nests nor is nested in the random utility approach. We provide a formal statistical test of the model accounting for sampling variability and demonstrate it in an illustrative example using data on capuchin monkeys.

Keywords: Preference for randomization, revealed preference, consumer theory

JEL Classification: C0, D01, D11

Suggested Citation

Allen, Roy and Dziewulski, Paweł and Rehbeck, John, Revealed Statistical Consumer Theory (October 22, 2019). Available at SSRN: https://ssrn.com/abstract=3474472 or http://dx.doi.org/10.2139/ssrn.3474472

Roy Allen

University of Western Ontario - Department of Economics ( email )

Social Science Centre, Room 4071
London, Ontario N6A 5C2
Canada

Paweł Dziewulski

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3UQ
United Kingdom

HOME PAGE: http://users.ox.ac.uk/~shil3804/

John Rehbeck (Contact Author)

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States

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