Thumbnail - Request a copy

Essential budgetary information in revealed preference analysis

Iehlé, Vincent; Forges, Françoise (2010), Essential budgetary information in revealed preference analysis. https://basepub.dauphine.fr/handle/123456789/5278

Type
Document de travail / Working paper
Date
2010
Publisher
Université Paris-Dauphine
Published in
Paris
Metadata
Show full item record
Author(s)
Iehlé, Vincent cc
Forges, Françoise
Abstract (EN)
Given budget sets and consumer's consumption bundles, the economist deduces essential budgetary information, namely, whether every consumption bundle is available in every budget set and whether it exhausts the consumer's revenue. We show that rationalization of the original data is equivalent to the existence of budget sets compatible with the essential data together with a utility function rationalizing these budget sets. Hence the conclusion of the original rationalizability test automatically applies to a whole class of budget sets. Furthermore, in case of a positive answer, a single utility function, which rationalizes at once almost all compatible budget sets, can be constructed.
Subjects / Keywords
consumption bundles; rationalization; budget sets
JEL
D31 - Personal Income, Wealth, and Their Distributions