Empirical Revealed Preference

Abstract

This article aims to provide an introduction to empirical revealed preference (RP) and an overview of the current state of the field. We hope to give a sense of how RP methods work and the types of questions they can address and to assess the strengths and drawbacks of the approach. After briefly recapping the basics of RP theory, we review and critically assess the literature in two main areas representing the principal fields in which recent research has made significant advances: broadening the scope of RP methods and dealing with empirical issues related to bringing RP to the data. We conclude with a discussion of some future directions.

Inference Under Stability of Risk Preferences

“…11 For reviews of this literature, see, for example, Varian (2005), Cherchye, Crawford, De Rock, andVermeulen (2009), andDe Rock (2014). 12 Much of the work in this strand contemplates individual, static choice, and linear budget sets.…”

“…In related work, researchers pursue revealed preference tests for intertemporal choice (e.g., Browning (1989)), nonlinear budget sets (e.g., Matzkin and Richter (1991)), market data (e.g., Brown and Matzkin (1996)), and collective choice (e.g., Chiappori (1988), Cherchye, De Rock, and Vermeulen (2007)). This work is surveyed by Crawford and De Rock (2014). 13 We take a nonparametric approach with respect to the probability distortion function, which is the object of our primary interest.…”

For Love or Reward? Characterising Preferences for Giving to Parents in an Experimental Setting

“… 3 We refer the reader to Crawford and De Rock (2014), who provide a comprehensive review of the literature on revealed preference methods, including how GARP can be tested empirically. …”

“…We refer the reader toCrawford and De Rock (2014), who provide a comprehensive review of the literature on revealed preference methods, including how GARP can be tested empirically.© 2015 The Authors. The Economic Journal published by John Wiley & Sons Ltd on behalf of Royal Economic Society.…”

Revealed preference theory: An algorithmic outlook

“…In this paper, we focus on algorithmic results concerning tests of rational behavior in consumer choice settings. For different discussions of the topic, we refer the reader to the recent monograph on the theory of revealed preference by Chambers and Echenique (2016), and to a survey by Crawford and De Rock (2014) on empirical revealed preference; an earlier overview can be found in Houtman (1995). Finally, we should note that certain aspects of revealed preference theory, as a way of explaining choice behavior, have also been criticized; see, e.g., the works of Hausman (2000) and Wong (2006).…”