TY - JOUR
T1 - Non-parametric bounds for non-convex preferences
AU - Halevy, Yoram
AU - Persitz, Dotan
AU - Zrill, Lanny
N1 - Publisher Copyright:
© 2017 Elsevier B.V.
PY - 2017/5/1
Y1 - 2017/5/1
N2 - Choices from linear budget sets are often used to recover consumer's preferences. The classic method uses revealed preference theory to construct non-parametric bounds on the indifference curve that passes through a given bundle. We show that these bounds do not apply to non-convex preferences, and therefore may lead to erroneous predictions and welfare analysis. We suggest an alternative that is based solely on the assumption of monotonicity of preferences.
AB - Choices from linear budget sets are often used to recover consumer's preferences. The classic method uses revealed preference theory to construct non-parametric bounds on the indifference curve that passes through a given bundle. We show that these bounds do not apply to non-convex preferences, and therefore may lead to erroneous predictions and welfare analysis. We suggest an alternative that is based solely on the assumption of monotonicity of preferences.
KW - Generalized axiom of revealed preference
KW - Non-convex preferences
KW - Partial identification
KW - Revealed preferences
UR - http://www.scopus.com/inward/record.url?scp=85015700831&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2017.02.006
DO - 10.1016/j.jebo.2017.02.006
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AN - SCOPUS:85015700831
SN - 0167-2681
VL - 137
SP - 105
EP - 112
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -