This lecture address the following two key criticisms of the empirical application of revealed preference theory: When the RP conditions do not reject, they do not provide precise predictions; and when they do reject, they do not help characterize the nature of irrationality or the degree/direction of changing tastes. Recent developments in the application of RP theory are shown to have rendere...

We develop a version of Afriat’s Theorem that is applicable to a variety of choice environments, beyond the setting of classical consumer theory. This allows us to devise tests for rationalizability in the context of choice data on lotteries, contingent consumption, and intertemporal consumption. We also establish a version of Richter’s Theorem that characterizes the strict rationalizability of...

Most decisions are made in the face of uncertainty due to incomplete evidence. The strength/weight hypothesis is that people are more persuaded when that evidence is extreme (high strength) than when it is reliable (high weight), even when these two dimensions of evidence are equivalent according to Bayes Rule. We investigate this hypothesis in an incentive-compatible revealed preference experi...

We develop a model of demand where consumers trade-off the utility of consumption against the disutility of expenditure. This model is appropriate whenever a consumer’s demand over a strict subset of all available goods is being analyzed. Data sets consistent with this model are characterized by the absence of revealed preference cycles over prices. The model is readily generalized to the rando...

To a fuzzy choice function C we assign the indicators of revealed preference WAFRP (C), SAFRP (C) and the indicators of congruence WFCA(C), SFCA(C). These indicators measure the degree to which the fuzzy choice function C verifies the axioms of revealed preference WAFRP , SAFRP and of congruenceWFCA and SFCA, respectively.

Extended Abstract: The most familiar setting for revealed preference analysis is that of consumer demand. In that context, Afriat’s Theorem (1967) gives necessary and sufficient conditions on a collection of observations to be consistent with the maximization of a monotone utility function, where each observation consists of a price vector and a demand bundle. Afriat’s Theorem is the starting p...

In this paper we assess the reading preference for marketing journals by deriving a journal utility scale based on click responses to table of contents postings to the ELMAR virtual community. Use of ELMAR data provides a unique window into journal importance, allowing us to look at table of contents reading behavior rather than citing behavior or attitudinal constructs as has been the case in ...

Revealed preference tests are elegant nonparametric tools that ask whether individual or aggregate data conform to economic models of optimizing behavior. In designing a test using revealed preference, however, one faces a vexing tension between goodness-of-…t and power. If the test …nds violations, then one must ask if the test was too demanding— is there an acceptable tolerance for goodness-o...