Arbeitspapier

Slutsky matrix norms and revealed preference tests of consumer behaviour

Given any observed finite sequence of prices, wealth and demand choices, we characterize the relation between its underlying Slutsky matrix norm (SMN) and some popular discrete revealed preference (RP) measures of departures from rationality, such as the Afriat index. We show that testing rationality in the SMN aproach with finite data is equivalent to testing it under the RP approach. We propose a way to "summarize" the departures from rationality in a systematic fashion in finite datasets. Finally, these ideas are extended to an observed demand with noise due to measurement error; we formulate an appropriate modification of the SMN approach in this case and derive closed-form asymptotic results under standard regularity conditions.

Language
Englisch

Bibliographic citation
Series: Working Paper ; No. 2015-1

Classification
Wirtschaft
Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: General
Household Behavior: General
Subject
consumer theory
rationality
Slutsky matrix function
revealed preference approach
bounded rationality

Event
Geistige Schöpfung
(who)
Aguiar, Victor H.
Serrano, Roberto
Event
Veröffentlichung
(who)
Brown University, Department of Economics
(where)
Providence, RI
(when)
2015

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Aguiar, Victor H.
  • Serrano, Roberto
  • Brown University, Department of Economics

Time of origin

  • 2015

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