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Revealed preference tests for consistency with weakly separable indirect utility

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Author

  • Per Hjertstrand
  • James Swofford

Summary, in English

Since Varian (Econometrica 50:945–973, 1982; Review of Economic Studies 50:90–110, 1983) made checking for consistency with revealed preference conditions more accessible to empirical researchers; researchers have often used revealed preference procedures to test their maintained hypotheses and narrow the scope of their demand studies. The tests developed by Varian are for the direct utility function, while researchers estimating demand systems often find it convenient to model consumer behavior with an indirect utility function. Unfortunately structure revealed in the direct utility function does not necessarily follow for the indirect utility function. To remedy this problem, we set forth conditions for checking consumer data for consistency with revealed preference conditions for minimization and weak separability of the indirect utility function.

Publishing year

2012

Language

English

Pages

245-256

Publication/Series

Theory and Decision

Volume

72

Issue

2

Document type

Journal article

Publisher

Springer

Topic

  • Economics

Keywords

  • Revealed preference - Indirect utility - Weak separability

Status

Published

ISBN/ISSN/Other

  • ISSN: 0040-5833