Parametric Recoverability of Preferences
Revealed preference theory is brought to bear on the problem of recovering approximate parametric preferences from consistent and inconsistent consumer choices. We propose measures of the incompatibility between the revealed preference ranking implied by choices and the ranking induced by the consid...
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| Veröffentlicht in: | The Journal of political economy 2018-08, Vol.126 (4), p.1558-1593 |
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| container_end_page | 1593 |
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| container_issue | 4 |
| container_start_page | 1558 |
| container_title | The Journal of political economy |
| container_volume | 126 |
| creator | Halevy, Yoram Persitz, Dotan Zrill, Lanny |
| description | Revealed preference theory is brought to bear on the problem of recovering approximate parametric preferences from consistent and inconsistent consumer choices. We propose measures of the incompatibility between the revealed preference ranking implied by choices and the ranking induced by the considered parametric preferences. These incompatibility measures are proven to characterize well-known inconsistency indices. We advocate a recovery approach that is based on such incompatibility measures and demonstrate its applicability for misspecification measurement and model selection. Using an innovative experimental design, we empirically substantiate that the proposed revealed-preference-based method predicts choices significantly better than a standard distance-based method. |
| doi_str_mv | 10.1086/697741 |
| format | Article |
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We propose measures of the incompatibility between the revealed preference ranking implied by choices and the ranking induced by the considered parametric preferences. These incompatibility measures are proven to characterize well-known inconsistency indices. We advocate a recovery approach that is based on such incompatibility measures and demonstrate its applicability for misspecification measurement and model selection. 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| fulltext | fulltext |
| identifier | ISSN: 0022-3808 |
| ispartof | The Journal of political economy, 2018-08, Vol.126 (4), p.1558-1593 |
| issn | 0022-3808 1537-534X |
| language | eng |
| recordid | cdi_uchicagopress_journals_697741 |
| source | EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; University of Chicago Press Journals |
| subjects | Approximation Economic theory Inconsistency Innovations Measurement Political economy Preferences Ratings & rankings Studies |
| title | Parametric Recoverability of Preferences |
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