Rationalizability, cost-rationalizability, and Afriat's efficiency index

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 cost (in)efficiency, in the sense that a consumer is spending more money than is required to achieve her utility targets.

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Year of publication:	2022
Authors:	Polisson, Matthew ; Quah, John K.-H.
Publisher:	London : Institute for Fiscal Studies (IFS)
Subject:	rationalizability \| cost-rationalizability \| Afriat's efficiency index \| CCEI

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Series:	IFS Working Paper ; W22/04
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	10.1920/wp.ifs.2022.0422 [DOI] 1787235637 [GVK] hdl:10419/254254 [Handle] RePEc:ifs:ifsewp:22/04 [RePEc]
Classification:	D11 - Consumer Economics: Theory ; D12 - Consumer Economics: Empirical Analysis
Source:	EconStor

Persistent link: https://www.econbiz.de/10013193569