2019

Homothetic Preferences Revealed

Reprint No. 2019:11

Author(s): Jan Heufer and Per HjertstrandYear: 2019 Title: Journal of Economic Behavior & Organization Volume (No.): 157 (January) Pages: 601–614
Online article (restrictions may apply)
Preliminary version


We introduce a method to recover homothetic preferences from choice data with minor optimization or measurement errors. Our method allows for a more detailed graphical analysis to reveal subjects’ preferences and to choose appropriate functional forms for parametric analysis. It has also various other uses such as improving applications of the money metric function or classifying choice data into different preference types. We illustrate some of those approaches using data from an experiment on social preferences.


Reference:
Heufer, Jan and Per Hjertstrand (2019), "Homothetic Preferences Revealed". Journal of Economic Behavior & Organization 157(January), 601–614.

Per Hjertstrand

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per.hjertstrand@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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