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Normality of Demand in a Two-Goods Setting

par Cherchye, Laurens;Demuynck, Thomas ;De Rock, Bram
Référence Journal of economic theory, 173, page (361-382)
Publication Publié, 2018-11-01

Article révisé par les pairs

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Résumé :

We study the testable implications of normal demand in a two-goods setting. For a finite dataset on prices and quantities, we present the revealed preference conditions for normality of one or both goods. Our characterization provides an intuitive extension of the well-known Weak Axiom of Revealed Preference, and is easy to use in practice. We illustrate the empirical relevance of our theoretical results through an application to an experimental dataset. We also briefly discuss extensions of our conditions to a setting with more than two goods.