Template-type: ReDif-Paper 1.0
Author-Name: Demuynck T. 
Author-Name: Seel C. 
Author-workplace-name: GSBE
Title: Revealed preference with limited consideration
Abstract: 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, unconstrained beliefs about the prices. By imposing restrictions on these subjective beliefs, 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.
Keywords: Consumer Economics: Theory; Consumer Economics: Empirical Analysis; Criteria for Decision-Making under Risk and Uncertainty; 
Classification-JEL: D11; D12; D81; .
Series:  research memorandum
Creation-Date: 2014
Number: 036
File-URL: http://pub.maastrichtuniversity.nl/9c27b0ed-e27e-48fc-8dc9-3dc87dbe4809
File-Format: application/pdf
File-Size: 357444
Handle: RePEc:unm:umagsb:2014036