Power Against Random Expenditure Allocation for Revealed Preference Tests

13 Pages Posted: 31 Dec 2019

See all articles by Per Hjertstrand

Per Hjertstrand

Research Institute of Industrial Economics (IFN)

Date Written: November 2019

Abstract

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

Hjertstrand, Per, Power Against Random Expenditure Allocation for Revealed Preference Tests (November 2019). IFN Working Paper No. 1309, 2019, Available at SSRN: https://ssrn.com/abstract=3500716 or http://dx.doi.org/10.2139/ssrn.3500716

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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