The Money Pump as a Measure of Revealed Preference Violations

@inproceedings{Echenique2011TheMP,
  title={The Money Pump as a Measure of Revealed Preference Violations},
  author={Federico Echenique and Matthew Shum},
  year={2011}
}
We introduce a measure of the severity of violations of the revealed preference axioms, which we call the money pump index (MPI). The measure uses the idea that a consumer who violates the axioms is subject to being exploited as a money pump. The MPI is the dollar amount that can be extracted from a consumer who behaves irrationally. The MPI can be interpreted as a statistical test for the hypothesis that a consumer is rational, when behavior is observed with error. We carry out an empirical… CONTINUE READING
Highly Cited
This paper has 68 citations. REVIEW CITATIONS

Citations

Publications citing this paper.

68 Citations

051015'11'13'15'17'19
Citations per Year
Semantic Scholar estimates that this publication has 68 citations based on the available data.

See our FAQ for additional information.

References

Publications referenced by this paper.
Showing 1-10 of 38 references

A Test of Consumer Demand Theory using Observations of Individal Consumer Purchases.

Battalio, Raymond, +4 authors Leonard Krasner
Western Economic Journal • 1973
View 5 Excerpts
Highly Influenced

The Construction of Utility Functions from Expenditure Data.

S. N. Afriat
International Economic Review • 1967
View 10 Excerpts
Highly Influenced

How Demanding Is the Revealed Preference Approach to Demand?

Beatty, M TimothyK., Ian A. Crawford
The American Economic Review • 2011

The Power of Revealed Preference Tests: Ex-Post Evaluation of Experimental Design.

Andreoni, Jim, Ben Gillen, William T. Harbaugh
2011

A Measure of Rationality and Welfare.

Apesteguia, Jose, Miguel A. Ballester
2010

A Geometric Measure for the Violation of Utility Maximization.

Heufer, Jan
Ruhr Economic Papers • 2008

Similar Papers

Loading similar papers…