Abstract
We present a statistical test for the hypothesis of (approximate) utility maximization on the basis of nonparametric revealed preference conditions. We take as null hypothesis that the ...consumer behaves randomly, and we reject this hypothesis only if the data provides sufficient evidence to support the alternative hypothesis of approximate utility maximization. Our statistical test uses a permutation method to operationalize the principle of random consumption behavior. We show that our test (i) is valid for any sample size under the null and (ii) has an asymptotic power of one. We also provide simulated power results and two empirical applications.
We present two Becker–DeGroot–Marschak type incentive compatible elicitation mechanisms. The first can be used to elicit an agent’s belief about the mean of a random variable while the second elicits ...the quantiles.
•We present two incentive compatible elicitation mechanisms.•The first elicits the mean of a random variable.•The second elicits the quantiles of a distribution.
Echenique, Lee, Shum, and Yenmez (2013) established the testable revealed preference restrictions for stable aggregate matching with transferable (TU) and non-transferable utility (NTU) and for ...extremal stable matchings. In this paper, we rephrase their restrictions in terms of properties on a corresponding bipartite graph. From this, we obtain a simple condition that verifies whether a given aggregate matching is rationalisable. For matchings that are not rationalisable, we provide a simple greedy algorithm that computes the minimum number of matches that needs to be removed to obtain a rationalisable matching. We also show that the related problem of finding the minimum number of types that we need to remove in order to obtain a rationalisable matching is NP-complete.
We consider a setting where a coalition of individuals chooses one or several alternatives from each set in a collection of choice sets. We examine the computational complexity of Pareto ...rationalizability. Pareto rationalizability requires that we can endow each individual in the coalition with a preference relation such that the observed choices are Pareto efficient. We differentiate between the situation where the choice function is considered to select all Pareto optimal alternatives from a choice set and the situation where it only contains one or several Pareto optimal alternatives. In the former case we find that Pareto rationalizability is an NP-complete problem. For the latter case we demonstrate that, if we have no additional information on the individual preference relations, then all choice behavior is Pareto rationalizable. However, if we have such additional information, then Pareto rationalizability is again NP-complete. Our results are valid for any coalition of size greater or equal than two.
We provide a revealed preference analysis of the "habits as durables" model. This approach avoids the need to impose a functional form on the underlying utility function. We show that our ...characterization is testable by means of linear programming methods, and we demonstrate its practical usefulness by means of an application to cigarette consumption using a Spanish household consumption data set. We find that the "habits as durables" model has better empirical fit in terms of predictive success compared to the "short memory habits" and life cycle models.
We propose a method to predict rational counterfactual demand responses from repeated cross-sections. We derive bounds on the distribution of counterfactual demands that are consistent with the Weak ...Axiom of Revealed Preferences, without putting any restriction on the preference heterogeneity across consumers. In contrast to existing methods, we also allow for endogeneity of total expenditures. In addition, the method can readily incorporate restrictions on the income elasticities of the consumption goods, which further enhances its identifying power (i.e. tighter bounds). We illustrate our approach through an application to data drawn from the U.S. Consumer Expenditure Survey.
Calcium is a key clotting factor, and several inorganic molecules that bind to calcium have been found to reduce the clotting propensity of blood. Citrate, a calcium chelator, is used as inhibitor of ...the coagulation cascade in blood transfusion. Also, it is used as an anaticoagulant during dialysis to maintain patency of the extracorporeal circuit, known as regional citrate anticoagulation (RCA). The amount of citrate should be chosen such that ionized calcium concentrations in the extracorporeal circuit are reduced enough to minimize propagation of the coagulation cascade. The dialytic removal of the calcium-citrate complexes combined with reduced ionized calcium concentrations makes necessary calcium supplementation of the blood returning to the patient. This can be achieved in different ways. In classical RCA, citrate and calcium are infused in the afferent and efferent tubing, respectively, whereas the dialysate does not contain calcium. This setup has been shown to be highly efficacious with a very low clotting propensity. Strict monitoring of blood electrolytes is required. Alternatively, the use of a high-calcium dialysate leads to calcium loading, obviating the need for a separate calcium infusion pump. The main advantages are simplified delivery of RCA and less fluctuation of systemic calcium concentrations. Currently, citric acid is sometimes added to the acid concentrate as a replacement for acetic acid. Differences and similarities between RCA and citrate-containing dialysate are discussed. RCA is an excellent alternative to heparin for patients at high risk of bleeding.
The theory of revealed preferences offers an elegant way to test the neoclassical model of utility maximization subject to a linear budget constraint. In many settings, however, the set of available ...consumption bundles does not take the form of a linear budget set. In this paper, we adjust the theory of revealed preferences to handle situations where the set of feasible bundles is finite. Such situations occur frequently in many real life and experimental settings. We derive the revealed preference conditions for consistency with utility maximization in this finite choice set setting. Interestingly, we find that it is necessary to make a distinction between the cases where the underlying utility function is weakly monotone, strongly monotone and/or concave. Next, we provide conditions on the structure of the finite choice sets for which the usual revealed preference condition (i.e. GARP) is still valid. We illustrate the relevance of our results by means of an illustration based on two experimental data sets that contain choice behaviour from children and young adults.
We provide a revealed preference characterization of expected utility maximization in binary lotteries with prize-probability trade-offs. We start by characterizing optimizing behavior when the ...empirical analyst exactly knows the utility function or the probability function of winning. Next, we consider the situation with both the probability function and the utility function unknown. In this case utility maximization has empirical content when imposing the mild shape restriction that at least one of these functions is log-concave.
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