Rationalizing and Curve-Fitting Demand Data with Quasilinear Utilities
12 Pages Posted: 16 Aug 2004
Date Written: July 2004
In the empirical and theoretical literature a consumer's utility function is often assumed to be quasilinear. In this paper we provide necessary and sufficient conditions for testing if the consumer acts as if she is maximizing a quasilinear utility function over her budget set. If the consumer's choices are inconsistent with maximizing a quasilinear utility function over her budget set, then we compute the best quasilinear rationalization of her choices.
Keywords: Quasilinear utilities, Afriat inequalities, Curve-fitting
JEL Classification: D11, D12
Suggested Citation: Suggested Citation