Abstract
We provide a microfoundation to use aggregates (e.g. mean purchases) to evaluate consumer choice data. We study statistical consumer theory where an individual maximizes a preference over distributions of bundles when constrained by a statistic of the distribution (e.g. mean expenditure). We show statistical consumer theory is observationally equivalent to an individual whose preferences depend only on the statistic of the distribution. This means that despite working with distributions, the empirical content of the model only depends on a finite-dimensional statistic. This approach generalizes random quasilinear utility with random income and mean-variance preferences.
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We thank Abi Adams-Prassl, Victor Aguiar, Christopher P. Chambers, Sylvain Chassang, Ian Crawford, Mogens Fosgerau, Jay Lu, Matthew Polisson, Kota Saito, Gerelt Tserenjigmid, Leeat Yariv, and participants at the conference on “Consumer Behaviour: New Models, New Methods” for helpful comments.
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Allen, R., Dziewulski, P. & Rehbeck, J. Revealed statistical consumer theory. Econ Theory 77, 823–847 (2024). https://doi.org/10.1007/s00199-023-01513-0
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DOI: https://doi.org/10.1007/s00199-023-01513-0
Keywords
- Demand aggregation
- Preference for randomization
- Revealed preference
- Statistical consumer
- Stochastic choice