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A simplified test for preference rationality of two-commodity choice

Published online by Cambridge University Press:  14 March 2025

Samiran Banerjee  and
James H. Murphy
Samiran Banerjee*
Affiliation:
Department of Economics, Emory University, Atlanta, GA 30322-2240
James H. Murphy*
Affiliation:
College of Business, Western Carolina University, Cullowhee, NC 28723, USA
*
Tel: 404-712-8168 Fax:404-727-4639 e-mail: sbaner3@emory.edu
e-mail: jmurphy@email.wcu.edu
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Abstract

We provide a simplified test to determine if choice data from a two-commodity consumption set satisfies the Generalized Axiom of Revealed Preference (GARP), and thus the preference or utility maximization hypothesis. We construct an algorithm for this test and illustrate its application on experimental choice data.

Keywords

Revealed preferenceGARPLaboratory experimentsRationality

JEL classification

D12: Consumer Economics: Empirical Analysis D11: Consumer Economics: Theory C91: Laboratory, Individual Behavior

Information

Type
Research Article
Information
Experimental Economics , Volume 9 , Issue 1 , April 2006 , pp. 67 - 75
Copyright
Copyright © 2006 Economic Science Association

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