367 research outputs found
Revealed Preference Dimension via Matrix Sign Rank
Given a data-set of consumer behaviour, the Revealed Preference Graph
succinctly encodes inferred relative preferences between observed outcomes as a
directed graph. Not all graphs can be constructed as revealed preference graphs
when the market dimension is fixed. This paper solves the open problem of
determining exactly which graphs are attainable as revealed preference graphs
in -dimensional markets. This is achieved via an exact characterization
which closely ties the feasibility of the graph to the Matrix Sign Rank of its
signed adjacency matrix. The paper also shows that when the preference
relations form a partially ordered set with order-dimension , the graph is
attainable as a revealed preference graph in a -dimensional market.Comment: Submitted to WINE `1
Revealed cardinal preference
I prove that as long as we allow the marginal utility for money (lambda) to
vary between purchases (similarly to the budget) then the quasi-linear and
the ordinal budget-constrained models rationalize the same data. However, we know that lambda is approximately constant. I provide a simple constructive proof for the necessary and sufficient condition for the constant lambda rationalization, which I argue should replace the Generalized Axiom of
Revealed Preference in empirical studies of consumer behavior.
'Go Cardinals!'
It is the minimal requirement of any scientifi c theory that it is consistent with
the data it is trying to explain. In the case of (Hicksian) consumer theory it was
revealed preference -introduced by Samuelson (1938,1948) - that provided an
empirical test to satisfy this need. At that time most of economic reasoning was
done in terms of a competitive general equilibrium, a concept abstract enough
so that it can be built on the ordinal preferences over baskets of goods - even if
the extremely specialized ones of Arrow and Debreu. However, starting in the
sixties, economics has moved beyond the 'invisible hand' explanation of how
-even competitive- markets operate. A seemingly unavoidable step of this
'revolution' was that ever since, most economic research has been carried out
in a partial equilibrium context. Now, the partial equilibrium approach does
not mean that the rest of the markets are ignored, rather that they are held
constant. In other words, there is a special commodity -call it money - that
reflects the trade-offs of moving purchasing power across markets. As a result,
the basic building block of consumer behavior in partial equilibrium is no longer
the consumer's preferences over goods, rather her valuation of them, in terms
of money. This new paradigm necessitates a new theory of revealed preference
Pricing Multi-Unit Markets
We study the power and limitations of posted prices in multi-unit markets,
where agents arrive sequentially in an arbitrary order. We prove upper and
lower bounds on the largest fraction of the optimal social welfare that can be
guaranteed with posted prices, under a range of assumptions about the
designer's information and agents' valuations. Our results provide insights
about the relative power of uniform and non-uniform prices, the relative
difficulty of different valuation classes, and the implications of different
informational assumptions. Among other results, we prove constant-factor
guarantees for agents with (symmetric) subadditive valuations, even in an
incomplete-information setting and with uniform prices
A direct method for measuring discounting and QALYs more easily and reliably
Time discounting and quality of life are two important factors in evaluations of medical interventions. The measurement of these two factors is complicated because they interact. Existing methods either simply assume one factor given, based on heuristic assumptions, or invoke complicating extraneous factors, such as risk, that generate extra biases. The authors introduce a method for measuring discounting (and then quality of life) that involves no extraneous factors and that avoids distorting interactions. Their method is considerably simpler and more realistic for subjec
Developing a decomposable measure of profit efficiency using DEA
In for-profit organizations efficiency measurement with reference to the potential for profit augmentation is particularly important as is its decomposition into technical, and allocative components. Different profit efficiency approaches can be found in the literature to measure and decompose overall profit efficiency. In this paper, we highlight some problems within existing approaches and propose a new measure of profit efficiency based on a geometric mean of input/output adjustments needed for maximizing profits. Overall profit efficiency is calculated through this efficiency measure and is decomposed into its technical and allocative components. Technical efficiency is calculated based on a non-oriented geometric distance function (GDF) that is able to incorporate all the sources of inefficiency, while allocative efficiency is retrieved residually. We also define a measure of profitability efficiency which complements profit efficiency in that it makes it possible to retrieve the scale efficiency of a unit as a component of its profitability efficiency. In addition, the measure of profitability efficiency allows for a dual profitability interpretation of the GDF measure of technical efficiency. The concepts introduced in the paper are illustrated using a numerical example
- …