directPrefs: Compute direct and indirect revealed preferences.
In revealedPrefs: Revealed Preferences and Microeconomic Rationality

Description Usage Arguments Details Value Author(s) References Examples

View source: R/prefs.R

The directPrefs function computes direct revealed preferences, the indirectPrefs function computes indirect revealed preferences.

1 2	directPrefs(x, p, afriat.par= 1) indirectPrefs(x, p, afriat.par= 1)

`x`	data frame or matrix containing the observed quantities, where each row corresponds to an observation and the columns are types of goods.
`p`	data frame or matrix (of same dimensions as x) containing the corresponding prices.
`afriat.par`	the Afriat parameter, real number in [0,1], which allows a certain level of error in the optimization of choices; default is 1, ie. no optimization error allowed.

Direct preferences are directly computed from matrix multiplication of prices and quantities. Indirect preferences are computed using a variant of the Floyd-Warshall algorithm.

A matrix of direct or indirect revealed preferences:

`prefs[i, j] = 0`	if bundle `i` is not revealed prefered to bundle `j`
`prefs[i, j] = 1`	if bundle `i` is revealed prefered to bundle `j`
`prefs[i, j] = 2`	if bundle `i` is strictly revealed prefered to bundle `j`

Julien Boelaert jubo.stats@gmail.com

Varian, H. R. (1984) Microeconomic Analysis. New York/London: Norton, 2nd edition, pp 141-143.

# Compute direct and indirect preferences of SARP-violating data:
data(noSarp)
directPrefs(noSarp$x, noSarp$p)
indirectPrefs(noSarp$x, noSarp$p)

     [,1] [,2] [,3]
[1,]    1    1    0
[2,]    0    1    1
[3,]    1    0    1
     [,1] [,2] [,3]
[1,]    1    1    1
[2,]    1    1    1
[3,]    1    1    1