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A general revealed preference test for quasilinear preferences: theory and experiments

Published online by Cambridge University Press:  14 March 2025

Marco Castillo Open the ORCID record for Marco Castillo [Opens in a new window]  and
Mikhail Freer
Marco Castillo*
Affiliation:
Department of Economics, Texas A&M University, College Station, USA Melbourne Institute, University of Melbourne, Melbourne, Australia IZA, Bonn, Germany
Mikhail Freer*
Affiliation:
Department of Economics, University of Essex, Wivenhoe Park, UK
*
[email protected]
[email protected]
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Abstract

We provide a generalized revealed preference test for quasilinear preferences. The test applies to nonlinear budget sets and non-convex preferences as those found in taxation and nonlinear pricing contexts. We study the prevalence of quasilinear preferences in a laboratory real-effort task experiment with nonlinear wages. The experiment demonstrates the empirical relevance of our test. We find support for either convex (non-separable) preferences or quasilinear preferences but weak support for the hypothesis of both quasilinear and convex preferences.

Keywords

Revealed preferencesQuasilinear preferencesLab experiments

JEL classification

D12: Consumer Economics: Empirical Analysis D11: Consumer Economics: Theory C91: Laboratory, Individual Behavior
Type
Original Paper
Information
Experimental Economics , Volume 26 , Issue 3 , July 2023 , pp. 673 - 696
Copyright
Copyright © The Author(s), under exclusive licence to Economic Science Association 2023.

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Footnotes

Supplementary Information The online version contains supplementary material available at https://doi.org/10.1007/s10683-023-09790-1.

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