Rationalizability, Cost-Rationalizability, and Afriat's Efficiency Index
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arXiv
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| Format: | Preprint |
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2024
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| _version_ | 1866911963260387328 |
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| author | Polisson, Matthew Quah, John K. -H. |
| author_facet | Polisson, Matthew Quah, John K. -H. |
| contents | This note explains the equivalence between approximate rationalizability and approximate cost-rationalizability within the context of consumer demand. In connection with these results, we interpret Afriat's (1973) critical cost efficiency index (CCEI) as a measure of approximate rationalizability through cost inefficiency, in the sense that an agent is spending more money than is required to achieve her utility targets. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2406_10136 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Rationalizability, Cost-Rationalizability, and Afriat's Efficiency Index Polisson, Matthew Quah, John K. -H. General Economics Economics This note explains the equivalence between approximate rationalizability and approximate cost-rationalizability within the context of consumer demand. In connection with these results, we interpret Afriat's (1973) critical cost efficiency index (CCEI) as a measure of approximate rationalizability through cost inefficiency, in the sense that an agent is spending more money than is required to achieve her utility targets. |
| title | Rationalizability, Cost-Rationalizability, and Afriat's Efficiency Index |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2406.10136 |