scholarly journals Testable Implications of Models of Intertemporal Choice: Exponential Discounting and Its Generalizations

2020 ◽  
Vol 12 (4) ◽  
pp. 114-143
Author(s):  
Federico Echenique ◽  
Taisuke Imai ◽  
Kota Saito
Keyword(s):  
Intertemporal Choice ◽  
Revealed Preference ◽  
Parametric Methods ◽  
Consumption Data ◽  
Exponential Discounting ◽  
Preference Tests

We present revealed-preference characterizations of the most common models of intertemporal choice: the model of exponentially discounted concave utility, and some of its generalizations. Our characterizations take consumption data as primitives, and provide nonparametric revealed-preference tests. We apply our tests to data from two recent experiments and find that our axiomatization delivers new insights and perspectives on datasets that had been analyzed by traditional parametric methods. (JEL C91, D11, D15)

scholarly journals Revealed Preference Tests of Collectively Rational Consumption Behavior: Formulations and Algorithms

2013 ◽  
Author(s):  
Fabrice Nobibon Talla ◽  
L. Cherchye ◽  
Yves Crama ◽  
Thomas Demuynck ◽  
Bram De Rock ◽  
...  
Keyword(s):  
Revealed Preference ◽  
Consumption Behavior ◽  
Preference Tests

scholarly journals New Developments in Revealed Preference Theory: Decisions Under Risk, Uncertainty, and Intertemporal Choice

2020 ◽  
Vol 12 (1) ◽  
pp. 299-316 ◽  
Author(s):  
Federico Echenique
Keyword(s):  
Expected Utility ◽  
Intertemporal Choice ◽  
Revealed Preference ◽  
New Developments ◽  
Preference Theory ◽  
Decisions Under Risk ◽  
Discounted Utility ◽  
Recent Developments ◽  
Functional Forms ◽  
Revealed Preference Theory

This article reviews recent developments in revealed preference theory. It discusses the testable implications of theories of choice that are germane to specific economic environments. The focus is on expected utility in risky environments, subjected expected utility and maxmin expected utility in the presence of uncertainty, and exponentially discounted utility for intertemporal choice. The testable implications of these theories for data on choice from classical linear budget sets are described and shown to follow a common thread. The theories all imply an inverse relation between prices and quantities, with different qualifications depending on the functional forms in the theory under consideration.

SEPARABILITY, AGGREGATION, AND EULER EQUATION ESTIMATION

2000 ◽  
Vol 4 (4) ◽  
pp. 547-572 ◽  
Author(s):  
Adrian R. Fleissig ◽  
A. Ronald Gallant ◽  
John J. Seater
Keyword(s):  
Durable Goods ◽  
Time Preference ◽  
Revealed Preference ◽  
Nondurable Goods ◽  
Consumption Data ◽  
Positive Rate ◽  
Lagged Effects ◽  
Divisia Aggregates ◽  
Special Case ◽  
Separability Structure

We derive a seminonparametric utility function containing the constant relative risk aversion (CRRA) function as a special case, and we estimate the associated Euler equations with U.S. consumption data. There is strong evidence that the CRRA function is misspecified. The correctly specified function includes lagged effects of durable goods and perhaps nondurable goods, is bounded as required by Arrow's Utility Boundedness Theorem, and has a positive rate of time preference. Constraining sample periods and separability structure to be consistent with the generalized axiom of revealed preference affects estimation results substantially. Using Divisia aggregates instead of the NIPA aggregates also affects results.

scholarly journals Revealed Preference with Limited Consideration

2018 ◽  
Vol 10 (1) ◽  
pp. 102-131 ◽  
Author(s):  
Thomas Demuynck ◽  
Christian Seel
Keyword(s):  
Sufficient Conditions ◽  
Revealed Preference ◽  
Household Consumption ◽  
Consideration Sets ◽  
Consideration Set ◽  
Consumption Choices ◽  
Consideration Set Formation ◽  
Necessary And Sufficient ◽  
Preference Tests ◽  
Basic Test

We derive revealed preference tests for models where individuals use consideration sets to simplify their consumption problem. Our basic test provides necessary and sufficient conditions for consistency of observed choices with the existence of consideration set restrictions. The same conditions can also be derived from a model in which the consideration set formation is endogenous and based on subjective prices. By imposing restrictions on these subjective prices, we obtain additional refined revealed preference tests. We illustrate and compare the performance of our tests by means of a dataset on household consumption choices. (JEL D11, D12, M31)

Revealed Preference Tests for Collective Household Behavior

2011 ◽  
pp. 83-98
Author(s):  
Laurens Cherchye ◽  
Bram De Rock ◽  
Frederic Vermeulen ◽  
Ewout Verriest
Keyword(s):  
Revealed Preference ◽  
Household Behavior ◽  
Preference Tests
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