Homothetic Preferences Revealed
We introduce a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects’ preferences and to choose appropriate functional forms for parametric analysis.
It has also various other uses such as improving applications of the money metric function or classifying choice data into different preference types. We illustrate some of those approaches using data from an experiment on social preferences.
|Graphical analysis Homotheticity Money metric utility Recoverability Revealed preference|
|Semiparametric and Nonparametric Methods (jel C14), Laboratory, Individual Behavior (jel C91), Consumer Economics: Theory (jel D11), Consumer Economics: Empirical Analysis (jel D12)|
|Journal of Economic Behavior & Organization|
Heufer, J.P.M, & Hjertstrand, P. (2018). Homothetic Preferences Revealed. Journal of Economic Behavior & Organization. doi:10.1016/j.jebo.2018.10.018