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- Title
Revealed preference tests for consistency with weakly separable indirect utility.
- Authors
Hjertstrand, Per; Swofford, James
- Abstract
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.
- Subjects
REVEALED preference theory; INDIRECT utility function (Economics); CONSUMER behavior; EMPIRICAL research; ECONOMIC demand; ECONOMIC models; HYPOTHESIS
- Publication
Theory & Decision, 2012, Vol 72, Issue 2, p245
- ISSN
0040-5833
- Publication type
Article
- DOI
10.1007/s11238-010-9226-3