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Goodness of fit in optimizing consumer's model

Alcantud, José Carlos R. and Matos, Daniel L. and Palmero, Carlos R. (2009): Goodness of fit in optimizing consumer's model.

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Abstract

We provide two new indices of efficiency for determining the degree of coherence in an agent's consumption decisions. We analyze to which extent they improve the efficiency displayed by Varian's (Journal of Econometrics, 1990) index. We report on the results of a Montecarlo experiment that confirms that strict improvements of Varian's vector-index appear on a regular basis.

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