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Revealed Preference (revealed + preference)
Selected AbstractsWelfare Economics with Intransitive Revealed Preferences: A Theory of the Endowment EffectJOURNAL OF PUBLIC ECONOMIC THEORY, Issue 2 2006H. LORNE CARMICHAEL Economists use the standard rational model to predict behavior after a policy change and to determine the policy's welfare implications. Recent experimental observations are casting doubt on the predictive accuracy of the standard model, but the more realistic behavioral alternatives often provide a poor basis for making normative evaluations. This paper suggests that we can still predict behavior and measure welfare within the same model. We show that optimizing agents with standard preferences will in some cases behave as if they are subject to an endowment effect. Even so, we may still be able to uncover information about their preferences. [source] Consistent poverty comparisons and inferenceAGRICULTURAL ECONOMICS, Issue 2-3 2007Channing Arndt Poverty measurement; Entropy estimation; Revealed preferences; Bootstrap Abstract Building upon the cost of basic needs (CBN) approach, an integrated approach to making consumption-based poverty comparisons is presented. This approach contains two principal modifications to the standard CBN approach. The first permits the development of multiple poverty bundles that are utility consistent. The second recognizes that the poverty line itself is a random variable whose variation influences the degree of confidence in poverty measures. We illustrate the empirical importance of these two methodological changes for the case of Mozambique. With utility consistency imposed, estimated poverty rates tend to be systematically higher in rural areas and lower in urban areas. We also find that the true confidence intervals on the poverty estimates,those incorporating poverty line variance,tend to be considerably larger than those that ignore poverty line variance. Finally, we show that these two methodological changes interact. Specifically, we find that imposing utility consistency on poverty bundles tends to tighten confidence intervals, sometimes dramatically, on provincial poverty estimates. We conclude that this revised approach represents an important advance in poverty analysis. The revised approach is straightforward and directly applicable in empirical work. [source] Best Nonparametric Bounds on Demand ResponsesECONOMETRICA, Issue 6 2008Richard Blundell This paper uses revealed preference inequalities to provide the tightest possible (best) nonparametric bounds on predicted consumer responses to price changes using consumer-level data over a finite set of relative price changes. These responses are allowed to vary nonparametrically across the income distribution. This is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths (Engel curves). We label these expansion path based bounds on demand responses as E-bounds. Deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterize taste change and to provide a stochastic environment within which violations of revealed preference inequalities can be assessed. [source] Divergence in alternative Hicksian welfare measures: the case of revealed preference for public amenitiesJOURNAL OF APPLIED ECONOMETRICS, Issue 6 2002Dr Sudip Chattopadhyay This paper investigates the divergence between the two Hicksian welfare measures of non-traded amenity improvement associated with housing. First, the Hicksian surplus measures for amenity changes are analytically developed based on explicit specification of utility structures. A hedonic two-stage approach is then applied to empirically show that, for quantity changes, in contrast to hypothetical markets, divergence in real market is small. The paper also analytically develops expressions for the income and substitution effects and empirically shows that for a given income effect, the greater the substitution effect the smaller the divergence between the two measures. Copyright © 2002 John Wiley & Sons, Ltd. [source] COMBINING REVEALED AND STATED PREFERENCE DATA TO ESTIMATE THE NONMARKET VALUE OF ECOLOGICAL SERVICES: AN ASSESSMENT OF THE STATE OF THE SCIENCEJOURNAL OF ECONOMIC SURVEYS, Issue 5 2008John C. Whitehead Abstract This paper reviews the marketing, transportation and environmental economics literature on the joint estimation of revealed preference (RP) and stated preference (SP) data. The RP and SP approaches are first described with a focus on the strengths and weaknesses of each. Recognizing these strengths and weaknesses, the potential gains from combining data are described. A classification system for combined data that emphasizes the type of data combination and the econometric models used is proposed. A methodological review of the literature is pursued based on this classification system. Examples from the environmental economics literature are highlighted. A discussion of the advantages and disadvantages of each type of jointly estimated model is then presented. Suggestions for future research, in particular opportunities for application of these models to environmental quality valuation, are presented. [source] WELL-BEHAVED PRODUCTION ECONOMIESMETROECONOMICA, Issue 4 2005Michael Mandler ABSTRACT We show that production economies are tātonnement stable if consumers satisfy the weak axiom of revealed preference. To ensure that producer supply decisions are well defined, we restrict prices in the tātonnement so that positive profits cannot occur but do allow supply decisions to be multi-valued. The model therefore permits linear activities and hence the technologies that admit capital theory paradoxes. The result thus shows that if the consumer side of the economy is well behaved then capital theory paradoxes are irrelevant for stability. Other features of the Walrasian general-equilibrium model that have aroused suspicion (e.g. that a price below its equilibrium value may have negative excess demand and thus temporarily move even lower in a tātonnement) may be a sign of trouble but also have nothing to do with capital theory paradoxes. We show that these phenomena arise even when there is no choice of technique and there is an aggregate production function. [source] Neuroeconomics: Using Neuroscience to Make Economic Predictions,THE ECONOMIC JOURNAL, Issue 519 2007Colin F. Camerer Neuroeconomics seeks to ground economic theory in detailed neural mechanisms which are expressed mathematically and make behavioural predictions. One finding is that simple kinds of economising for life-and-death decisions (food, sex and danger) do occur in the brain as rational theories assume. Another set of findings appears to support the neural basis of constructs posited in behavioural economics, such as a preference for immediacy and nonlinear weighting of small and large probabilities. A third direction shows how understanding neural circuitry permits predictions and causal experiments which show state-dependence of revealed preference , except that states are biological and neural variables. [source] Quality of Life and the Migration of the College-Educated: A Life-Course ApproachGROWTH AND CHANGE, Issue 1 2008RONALD L. WHISLER ABSTRACT This paper examines how the college-educated population,segmented into selective demographic groups, from young adults to the elderly,differentially values quality-of-life (QOL) indicators of metropolitan areas in the United States. Using data from the 2000 Census and the 1997 Places Rated Almanac, out-migration patterns are shown to depend jointly upon stage in the life course, the spatial-demographic setting, and QOL characteristics. An abundance of cultural and recreational amenities lowers out-migration rates of young college-educated. For the older college-educated population, the revealed preferences shift toward concerns for safety and a strong preference for milder climates. The study also finds significantly lower out-migration rates for metropolitan areas with growing human capital. In light of shifting age distributions and rising educational attainment levels, the results have important implications for the emergence of new migration patterns and the concentration of human capital. [source] Combining Stated and Revealed Preferences on Typical Food Products: The Case of Dry-Cured Ham in SpainJOURNAL OF AGRICULTURAL ECONOMICS, Issue 3 2010Helena Resano-Ezcaray C25; D12; Q13; Q18 Abstract An extensive body of research concerns the valuation of EU certification schemes of quality based on the origin of food products. This literature focuses mainly on stated preferences (SPs) and reported behaviours by the consumers. We combine consumers' SPs, obtained through a conjoint ranking experiment, with revealed preferences (RP), obtained through a retail scanner database. We evaluate SPs as predictors of RP, and investigate whether SPs and RPs are consistent. Dry-cured ham in Spain is chosen as the anchor product, mainly because of its broad customer base and long history of origin certification. A ,trick' nested logit model with non-identical and identical samples of consumers is estimated to answer each of the objectives. Results show that, irrespective of the analysed samples, SP can predict general market trends and choices but not accurately predict market shares, and that consumers' actual behaviour is partly consistent with their SPs. We find that consumers prefer ham produced in Teruel, compared with unspecified Spanish origin. Quality Certification and a Distributor's Brand are preferred over the alternatives of no quality label or identified with a brand owned by the producer. Interestingly, SPs for the Quality Certification and the distributor's brand lead to an over- and under-estimation, respectively, of the market share. [source] | ||||||||||||||||||||||