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A Monte Carlo Study of the Necessary and Sufficienct Conditions for Weak Separability

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Author

  • Per Hjertstrand

Summary, in English

Weak separability is an important concept in many fields of economic theory. This chapter uses Monte Carlo experiments to investigate the performance of newly developed nonparametric revealed preference tests for weak separability. A main finding is that the bias of the sequentially implemented test for weak separability proposed by Fleissig and Whitney (2003) is low. The theoretically unbiased Swofford and Whitney test (1994) is found to perform better than all sequentially implemented test procedures but is found to suffer from an empirical bias, most likely because of the complexity in executing the test procedure. As a further source of information, we also perform sensitivity analyses on the nonparametric revealed preference tests. It is found that the Fleissig and Whitney test seems to be sensitive to measurement errors in the data.

Publishing year

2009

Language

English

Pages

151-182

Publication/Series

Advances in Econometrics

Volume

24

Document type

Journal article

Publisher

Elsevier

Topic

  • Economics

Status

Published

ISBN/ISSN/Other

  • ISSN: 0731-9053