Power Against Random Expenditure Allocation for Revealed Preference Tests
13 Pages Posted: 31 Dec 2019
Date Written: November 2019
This paper proposes new power indices for revealed preference tests. The indices are based on a model of irrational consumption behavior where the consumer randomly allocates a certain fraction of expenditure. The methods allow a researcher to trace out the entire power curve against random expenditure allocation. The power indices are illustrated on altruistic choices in experimental data.
Keywords: GARP; Power; Revealed preference
JEL Classification: C14; D12
Suggested Citation: Suggested Citation