How many types are there

We consider a revealed preference‐based method that will bound the minimal partition of consumer microdata into a set of preference types such that the data are perfectly rationalisable by standard utility theory. This provides a simple, non‐parametric and theory‐driven way of investigating unobserved preference heterogeneity in empirical data, and easily extends to any choice model which has a revealed preference characterisation. We illustrate the approach using survey data and find that the number of types is remarkably few relative to the sample size – only four or five types are necessary to fully rationalise all observed choices in a data set with 500 observations of choice vectors

Combinatorics · Data set · Econometrics · Mathematical economics · Microdata (statistics · Parametric statistics · Partition (number theory · Preference · Revealed preference · Set (abstract data type · Statistics · Computer Science · Consumer Market Behavior and Pricing · Economic and Environmental Valuation · Economics of Agriculture and Food Markets · Mathematics

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