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Theory and Decision

, Volume 72, Issue 2, pp 245–256 | Cite as

Revealed preference tests for consistency with weakly separable indirect utility

  • Per Hjertstrand
  • James L. SwoffordEmail author
Article

Abstract

Since Varian (Econometrica 50:945–973, 1982; Review of Economic Studies 50:90–110, 1983) made checking for consistency with revealed preference conditions more accessible to empirical researchers; researchers have often used revealed preference procedures to test their maintained hypotheses and narrow the scope of their demand studies. The tests developed by Varian are for the direct utility function, while researchers estimating demand systems often find it convenient to model consumer behavior with an indirect utility function. Unfortunately structure revealed in the direct utility function does not necessarily follow for the indirect utility function. To remedy this problem, we set forth conditions for checking consumer data for consistency with revealed preference conditions for minimization and weak separability of the indirect utility function.

Keywords

Revealed preference Indirect utility Weak separability 

JEL Classification

C60 D11 D12 

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Copyright information

© Springer Science+Business Media, LLC. 2010

Authors and Affiliations

  1. 1.Department of EconomicsLund UniversityLundSweden
  2. 2.Department of Economics and FinanceUniversity of South AlabamaMobileUSA

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