Showing papers by "Hal R. Varian published in 1983"
TL;DR: In this article, the authors present two quite distinct approaches to derive necessary and sufficient conditions involving the derivatives of the demand functions of a consumer's choice behavior subject to a budget constraint.
Abstract: The neoclassical model of consumer behaviour postulates that a consumer's choice behaviour can be described as deriving from utility maximization subject to a budget constraint. One is then naturally led to ask what this model implies about observed behaviour. This question has been addressed from two quite distinct approaches. The first approach, originating in the work of Slutsky (1915) and Antonelli (1886), derives necessary and sufficient conditions involving the derivatives of the demand functions. The second approach, originating in the work of Samuelson (1938), (1947), (1948), derives algebraic conditions on the demand functions implied by maximizing behaviour.
518 citations
TL;DR: The standard models of consumer behavior under uncertainty are the expected utility model and the mean-variance model as discussed by the authors, and the empirical content of these hypotheses is discussed in Section 2.1.
Abstract: The standard models of consumer behavior under uncertainty are the expected utility model and the mean-variance model. As with any models involving unobservables one might well ask about the empirical content of these hypotheses: what restrictions on observed behavior do these models impose? How can one test observed behavior for consistency with these models? How can one recover the underlying utility function and forecast behavior in new situations?
75 citations