Revealed cardinal preference

Research output: Contribution to journalArticlepeer-review

Abstract

I prove that as long as we allow the marginal utility for money ( λ ) to vary between purchases (similarly to the budget), then the quasi-linear and the ordinal budget-constrained models rationalize the same data on consumer purchases. However, in the short run, λ is approximately constant. I provide a simple constructive proof for the necessary and sufficient condition for the constant λ rationalization, which I argue should replace the Generalized Axiom of Revealed Preference in empirical studies of consumer behavior.
Original languageEnglish
Pages (from-to)39-45
Number of pages6
JournalEconomic Theory Bulletin
Volume1
Issue number1
DOIs
Publication statusPublished - 1 May 2013

Keywords

  • Cardinal utility
  • D12
  • Consumer behavior
  • Rational choice
  • Partial equilibrium
  • D11

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