Open AccessIs utility transferable? A revealed preference analysis
Author(s) -
Cherchye Laurens,
Demuynck Thomas,
De Rock Bram
Publication year - 2015
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te1560
Subject(s) - transferable utility , preference , revealed preference , expected utility hypothesis , computer science , economics , mathematical economics , microeconomics , game theory
The transferable utility hypothesis underlies important theoretical results in household economics. We provide a revealed preference framework for bringing this (theoretically appealing) hypothesis to observational data. We establish revealed preference conditions that must be satisfied for observed household consumption behavior to be consistent with transferable utility. We also show that these conditions are testable by means of integer programming methods.