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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. (Unpublished)

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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)
Echenique, Federico0000-0002-1567-6770
Shum, Matthew0000-0002-6262-915X
Group:Social Science Working Papers
Subject Keywords:Revealed preference; GARP; Money pump; Demand theory
Series Name:Social Science Working Paper
Issue or Number:1328
Classification Code:JEL classication: D11,D12
Record Number:CaltechAUTHORS:20100927-114449846
Persistent URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:20165
Deposited By: Katherine Johnson
Deposited On:28 Sep 2010 16:29
Last Modified:26 Nov 2019 11:15

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