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Title: The nonparametric approach to demand analysis : essays in revealed preference theory
Author: Adams, Abigail
Awarding Body: University of Oxford
Current Institution: University of Oxford
Date of Award: 2013
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This thesis comprises three principal essays, each of which provides a contribution to the literature on the nonparametric approach to demand analysis. In each essay, I develop novel techniques that follow in the revealed preference tradition, and apply them to tackle a series of questions that concern the mechanisms underlying consumer spending decisions. Each technique developed is tightly linked to a particular nonparametric theory of choice behaviour and is explicitly designed for use with a finite set of observations. My work draws heavily upon results from finite mathematics, into which I integrate insights from information theory and integer programming. The output of this endeavor is a set of methodologies that are largely free of auxiliary assumptions over the form of the unobserved structural functions of interest. Providing greater detail on the work to come, my first essay extends and clarifies the nonparametric approach to forecasting demand behaviour at new budget regimes. Using insights from information theory and integer programming, I construct an operational nonparametric definition of global rationality and develop a methodology that facilitates the recovery of globally rational individual demand predictions. This is the first attempt in the literature to develop a systematic methodology to impose global rationality on nonparametric demand predictions. The resulting forecasts allow for unrestricted preference heterogeneity in the population and I demonstrate how these predictions can be used for coherent welfare analysis. In my second and third essays, I prove new revealed preference testability axioms for models that extend the traditional neoclassical choice framework. Specifically, in my second essay, I address the intertemporal allocation of spending by collectives, whilst my final essay integrates taste variation into the utility maximisation framework. In both of these essays, I develop my testable results into practical algorithms that allow one to recover salient features of individual preferences. In my second essay, a methodology is developed to recover the minimal intrahousehold heterogeneity in theory-consistent discount rates, whilst my final essay develops a quadratic programming procedure that facilitates the recovery of the minimal interpersonal and intertemporal heterogeneity in tastes that is required to rationalise observed choice patterns. Applying these techniques to consumption micro-data yields new empirical insights that are of relevance to the applied literatures on time discounting, family economics and the public policy debate on tobacco control.
Supervisor: Crawford, Ian Sponsor: Economic and Social Research Council
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Social Sciences ; Economics ; Econometrics ; Microeconomics ; Revealed preference ; consumer demand