The Money Pump as a Measure of Revealed Preference Violations

• 成果类型: Article
• 署名作者: Echenique, Federico; Lee, Sangmok; Shum, Matthew
• 署名单位: California Institute of Technology
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/665011
• 发表日期: 2011
• 页码: 1201-1223
• 关键词: consumer-behavior; pure theory; demand; Consistency; sales; GARP

摘要

We introduce a measure of the severity of violations of the revealed preference axioms, the money pump index (MPI). The MPI is the amount of money one can extract from a consumer who violates the axioms. It is also a statistical test for the hypothesis that a consumer is rational when behavior is observed with error. We present an application using a panel data set of food expenditures. The data exhibit many violations of the axioms. Mostly, the MPI for these violations is small. The MPI indicates that the hypothesis of consumer rationality cannot be rejected.