Theoretical Economics

Journal of the Econometric Society

Edited by: Federico Echenique • ISSN (e): 1555-7561 • ISSN (print): 1933-6837

Theoretical Economics: Jan, 2015, Volume 10, Issue 1

Is utility transferable? a revealed preference analysis

https://doi.org/10.3982/TE1560
p. 51-65

Laurens Cherchye, Thomas Demuynck, Bram De Rock

The transferable utility hypothesis underlies important theoretical results in household economics. We provide a revealed preference framework for bringing this (theoretically appealing) hypothesis to observational data. We establish revealed preference conditions that must be satisfied for observed household consumption behavior to be consistent with transferable utility. We also show that these conditions are testable by means of integer programming methods.


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