Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households
Consumer behavior analysis is a fundamental issue in economics. The most prominent methodology that economists use to attribute preferences according to this principle is the revealed preference concept. Therefore, neoclassical utility function is capable to test the rational behavior hypothesis of...
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| Format: | Article |
| Language: | fas |
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Tarbiat Modares University
2008-07-01
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| Series: | پژوهشهای اقتصادی |
| Subjects: | |
| Online Access: | http://ecor.modares.ac.ir/article-18-8050-en.pdf |
| _version_ | 1797803177893953536 |
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| author | Massoud Homayounefar Hamid Tavana |
| author_facet | Massoud Homayounefar Hamid Tavana |
| author_sort | Massoud Homayounefar |
| collection | DOAJ |
| description | Consumer behavior analysis is a fundamental issue in economics. The most prominent methodology that economists use to attribute preferences according to this principle is the revealed preference concept. Therefore, neoclassical utility function is capable to test the rational behavior hypothesis of consumer.
In this paper, we formalize a method of revealed preferences in place of neoclassical utility function to test the hypothesis of rational behavior using the Iranian rural households’ consumption data over the period 1982-2005. According to results, we didn't detect any violations in the whole consumption data. But in agriculture commodities group, we detected 4 violations using generalized Afriat index ascribed to measurement error. overall, the findings of the study confirm the hypothesis of rational behavior. Thus, there exists a utility function that is non-satiated, continuous, monotonic, and concave that rationalizes the consumption data of rural households in Iran |
| first_indexed | 2024-03-13T05:16:56Z |
| format | Article |
| id | doaj.art-2ab4fe76b94a43c88bd4214cf348463a |
| institution | Directory Open Access Journal |
| issn | 1735-6768 2980-7832 |
| language | fas |
| last_indexed | 2024-03-13T05:16:56Z |
| publishDate | 2008-07-01 |
| publisher | Tarbiat Modares University |
| record_format | Article |
| series | پژوهشهای اقتصادی |
| spelling | doaj.art-2ab4fe76b94a43c88bd4214cf348463a2023-06-15T20:31:51ZfasTarbiat Modares Universityپژوهشهای اقتصادی1735-67682980-78322008-07-0182119132Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural HouseholdsMassoud Homayounefar0Hamid Tavana1 University of Zabol University of Zabol Consumer behavior analysis is a fundamental issue in economics. The most prominent methodology that economists use to attribute preferences according to this principle is the revealed preference concept. Therefore, neoclassical utility function is capable to test the rational behavior hypothesis of consumer. In this paper, we formalize a method of revealed preferences in place of neoclassical utility function to test the hypothesis of rational behavior using the Iranian rural households’ consumption data over the period 1982-2005. According to results, we didn't detect any violations in the whole consumption data. But in agriculture commodities group, we detected 4 violations using generalized Afriat index ascribed to measurement error. overall, the findings of the study confirm the hypothesis of rational behavior. Thus, there exists a utility function that is non-satiated, continuous, monotonic, and concave that rationalizes the consumption data of rural households in Iranhttp://ecor.modares.ac.ir/article-18-8050-en.pdfgeneralized axiom of revealed preferenceneoclassical utility functionafriat theoremgeneralized afriat index |
| spellingShingle | Massoud Homayounefar Hamid Tavana Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households پژوهشهای اقتصادی generalized axiom of revealed preference neoclassical utility function afriat theorem generalized afriat index |
| title | Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households |
| title_full | Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households |
| title_fullStr | Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households |
| title_full_unstemmed | Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households |
| title_short | Application of Revealed Preferences Methodology for Testing Rational Behavior of Rural Households |
| title_sort | application of revealed preferences methodology for testing rational behavior of rural households |
| topic | generalized axiom of revealed preference neoclassical utility function afriat theorem generalized afriat index |
| url | http://ecor.modares.ac.ir/article-18-8050-en.pdf |
| work_keys_str_mv | AT massoudhomayounefar applicationofrevealedpreferencesmethodologyfortestingrationalbehaviorofruralhouseholds AT hamidtavana applicationofrevealedpreferencesmethodologyfortestingrationalbehaviorofruralhouseholds |