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.
Authors
Ian Crawford
Research Fellow Simon Fraser University
Krishna is a Research Fellow at the IFS, a Professor at Simon Fraser University and has an Economics Endowed Professorship at Simon Fraser University.
Journal article details
- DOI
- 10.1111/j.1468-0297.2012.02545.x
- Publisher
- Wiley
- Issue
- Volume 123, Issue 567, March 2013, pages 77-95
Suggested citation
Crawford, I and Pendakur, K. (2013). 'How many types are there?' 123(567/2013), pp.77–95.
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