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How Demanding Is the Revealed Preference Approach to Demand?

Abstract:

A well-known problem with revealed preference methods is that when data are found to satisfy their restrictions it is hard to know whether this should be viewed as a triumph for economic theory, or a warning that these conditions are so undemanding that almost anything goes. This paper allows researchers to make this distinction. Our approach uses an axiomatic characterization of a measure of predictive success due to Selten (1991). We illustrate the idea using a panel dataset. The results sh...

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Publisher copy:
10.1257/aer.101.6.2782
Publisher:
American Economic Association
Journal:
American Economic Review
Volume:
101
Issue:
6
Pages:
2782 - 2795
Publication date:
2011-10-01
DOI:
ISSN:
0002-8282
Language:
English
UUID:
uuid:68bc4965-8111-41ff-9456-20511a243bd4
Local pid:
oai:economics.ouls.ox.ac.uk:15303
Deposit date:
2011-12-22

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