Abstract
We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufficient conditions for consistency of observed choices with the existence of consideration set restrictions. The same conditions can also be derived from a model in which the consideration set formation is endogenous and based on subjective prices. By imposing restrictions on these subjective prices, we obtain additional refined revealed preference tests. We illustrate and compare the performance of our tests by means of a dataset on household consumption choices.
Original language | English |
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Pages (from-to) | 102-131 |
Number of pages | 30 |
Journal | American Economic Journal-Microeconomics |
Volume | 10 |
Issue number | 1 |
Early online date | 2017 |
DOIs | |
Publication status | Published - Feb 2018 |
Keywords
- REFERENCE PRICE RESEARCH
- GOODNESS-OF-FIT
- CONSIDERATION SETS
- COLLECTIVE MODEL
- AFRIATS THEOREM
- EMPIRICAL TESTS
- CONSUMPTION
- CHOICE
- BEHAVIOR
- SEARCH
Datasets
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Replication data for: Revealed Preference with Limited Consideration
Seel, C. (Creator) & Demuynck, T. (Contributor), ICPSR, 12 Oct 2019
DOI: 10.3886/e114351v1, https://doi.org/10.3886%2Fe114351v1
Dataset/Software: Dataset