What Types are There?

Preferences differ in the population, and this heterogeneity may not be adequately described by observed characteristics and additive error terms. As a first contribution, this study shows that preference heterogeneity can be represented graphically by means of violations of the Weak Axiom of Reveal...

Full description

Saved in:
Bibliographic Details
Published in:Computational economics 2019-02, Vol.53 (2), p.533-554
Main Author: Cosaert, Sam
Format: Article
Language:English
Subjects:
Behavioral/Experimental Economics
Cluster analysis
Computation
Computer Appl. in Social and Behavioral Sciences
Economic models
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Graphical representations
Heterogeneity
Labor supply
Math Applications in Computer Science
Operations Research/Decision Theory
Partitions
Preferences
Violations
Wages & salaries
Warp
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Preferences differ in the population, and this heterogeneity may not be adequately described by observed characteristics and additive error terms. As a first contribution, this study shows that preference heterogeneity can be represented graphically by means of violations of the Weak Axiom of Revealed Preference (WARP), and that computing the minimum number of partitions necessary to break all WARP violations in the sample is equivalent to computing the chromatic number of this graph. Second, the study builds the bridge between revealed preference theory and cluster analysis to assign individuals to these partitions (i.e. preference types). The practical methods are applied to Dutch labour supply data, to recover reservation wages of individuals who belong to particular preference types.
ISSN:0927-7099
1572-9974
DOI:10.1007/s10614-017-9752-y