Titel: The Problems of Testing Preference Axioms with Revealed Preference Theory
Autor: Till Grüne
Abstract: In economics, it has often been claimed that testing choice data for violation of certain axioms - particularly if the choice data is observed under laboratory conditions - allows conclusions about the validity of certain preference axioms and the neoclassical maximization hypothesis. In this paper I argue that these conclusions are unfounded. In particular, it is unclear what exactly is tested, and the interpretation of the test results are ambiguous. Further, there are plausible reasons why the postulated choice axioms should not hold. Last, these tests make implicit assumptions about beliefs that further blur the interpretations of the results. The tests therefore say little if anything about the validity of certain preference axioms or the maximization hypothesis.
Philosophical and Methodologial Issues in Economics
2004 (26) Heft 2
Guest-Editors: Mark S. Peacock / Michael Schefczyk
The 'dismal science of economics', as it was once called, has a mixed reputation. Some praise its clarity and elegance whilst others bewail its futility; others laud the precision of its mathematical form whereas others still descry the source of its irrelevance and unrealism in just this form. Many feel that precision and mathematisation are bought at a price too high, namely unrealistic assumptions, empty models with little or no explanatory power, unreliable predictions and a general state of...