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Revealed Preference Tests using Supermarket Data: the Money Pump

Echenique, Federico and Lee, SangMok and Shum, Matthew (2010) Revealed Preference Tests using Supermarket Data: the Money Pump. Social Science Working Paper, 1328. California Institute of Technology , Pasadena, CA. http://resolver.caltech.edu/CaltechAUTHORS:20100927-114449846

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Abstract

We use a money pump argument to measure deviations from the revealed preference axioms. Using a panel data set of food expenditures, we find a large number of violations of the weak axiom of revealed preference. The money pump costs are small, which indicate that the violations of revealed preference are not severe. While most households' behavior deviates from rationality, by our measure they are close to being rational.


Item Type:Report or Paper (Working Paper)
Group:Social Science Working Papers
Subject Keywords:Revealed preference; GARP; Money pump; Demand theory
Classification Code:JEL classication numbers: D11,D12
Record Number:CaltechAUTHORS:20100927-114449846
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20100927-114449846
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:20165
Collection:CaltechAUTHORS
Deposited By: Shirley Johnson
Deposited On:28 Sep 2010 16:29
Last Modified:26 Dec 2012 12:28

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