Varian (1988) showed that the utility maximization hypothesis cannot be falsified when only a subset of goods is observed. We show that this result does not hold under the assumptions that unobserved prices and expenditures remain constant. These assumptions are naturally satisfied in laboratory...

We find a strong relationship between risk-loving preferences and cognitive ability which becomes stronger as adherence to the generalized axiom of revealed preference (a proxy for rationality) increases. Our results are taken from a field study of individuals at the very bottom of the income...

Iran has the world's only government-regulated kidney market. We report the results of the first field study of donor behaviour in this unusual market. Participants have lower risk tolerance and higher patience levels than the Iranian average but display no difference in rationality from...

Consider a finite data set where each observation consists of a bundle of contingent consumption chosen by an agent from a constraint set of such bundles. We develop a general procedure for testing the consistency of this data set with a broad class of models of choice under risk and under...

We develop a nonparametric procedure, called the lattice method, for testing the consistency of contingent consumption data with a broad class of models of choice under risk and under uncertainty. Our method allows for risk loving and elation seeking behavior and can be used to calculate, via...

Samuelson's (1938) weak (generalized) axiom of revealed preference- WGARP-is a minimal and appealing consistency condition of choice. We offer a rationalization of WGARP in general settings. Our main result is an exact analog of the celebrated Afriat's theorem, but for WGARP. Its ordinal...

A nonparametric approach is presented to test whether decisions on a probability simplex could be induced by quasiconcave preferences. Necessary and sufficient conditions are presented. If the answer is affirmative, the methods developed here allow to reconstruct bounds on indifference curves....

We identify a natural counterpart of the standard GARP for demand data in which goods are all indivisible. We show that the new axiom (DARP, for "discrete axiom of revealed preference") is necessary and sufficient for the rationalization of the data by a well-behaved utility function. Our...

Since Paul Samuelson introduced the theory of revealed preference, it has become one of the most important concepts in economics. This chapter surveys some recent contributions in the revealed preference literature. We depart from Afriat's theorem, which provides the conditions for a data set to...

The Slutsky matrix function encodes all the information about local variations in demand with respect to small (Slutsky) compensated price changes. When the demand function is the result of utility maximization the Slutsky matrix is symmetric. However, symmetry does not imply rationality. Here,...