This chapter contains a state of the art of revealed preference tests for consistency of observed household behavior with Pareto efficiency. These tests are entirely nonparametric, since they do not require any assumptions regarding the parametric form of individual preferences or the intrahousehold bargaining process. We start with a discussion of some tests that are based on Chiappori’s (Econometrica, 56, 63–89, 1988) seminal labor supply model with egoistic preferences and observed individual leisure. We then present revealed preference conditions for Browning and Chiappori’s (Econometrica, 66, 1241–1278, 1998) collective consumption model with general individual preferences (including public goods and externalities) and only aggregate household consumption observed. Finally, we deal with a test for special cases of the general model, one that is based on integer programming.
|Title of host publication||Household Economic Behaviors|
|Place of Publication||New York|
|Number of pages||260|
|Publication status||Published - 2011|
|Name||International Series on Consumer Science|