Revealed Price Preference: Theory and Empirical Analysis

DOI10.1093/RESTUD/RDAC041MaRDI QIDQ6104777zbMATH OpenFDO

Authors Rahul Deb, Yuichi Kitamura, John K.-H. Quah, Jörg Stoye

Publication date 28 June 2023

Published in Review of Economic Studies (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1801.02702

zbMATH Keywords

non-parametric counterfactual analysisrevealed preferencewelfare analysis

Mathematics Subject Classification ID

Individual preferences (91B08) Welfare economics (91B15)

Abstract: To determine the welfare implications of price changes in demand data, we introduce a revealed preference relation over prices. We show that the absence of cycles in this relation characterizes a consumer who trades off the utility of consumption against the disutility of expenditure. Our model can be applied whenever a consumer's demand over a strict subset of all available goods is being analyzed; it can also be extended to settings with discrete goods and nonlinear prices. To illustrate its use, we apply our model to a single-agent data set and to a data set with repeated cross-sections. We develop a novel test of linear hypotheses on partially identified parameters to estimate the proportion of the population who are revealed better off due to a price change in the latter application. This new technique can be used for nonparametric counterfactual analysis more broadly.

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(13)

• Applied welfare analysis for discrete choice with interval-data on income
• Revealed Preference Analysis of Characteristics Models
• Empirical welfare analysis for discrete choice: some general results
• Revealed preference tests for price competition in multi-product differentiated markets
• A computational approach to identification of treatment effects for policy evaluation
• Revealed statistical consumer theory
• Revealed preference and revealed preference cycles: a survey
• Category-dependent preferences and stochastic choice
• An alternative approach for nonparametric analysis of random utility models
• An ordinal approach to the empirical analysis of games with monotone best responses
• A Revealed Preference Approach to Identification and Inference in Producer-Consumer Models
• Counterfactual identification and latent space enumeration in discrete outcome models
• Choice and opportunity costs

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