Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251112 
Year of Publication: 
2021
Series/Report no.: 
EERI Research Paper Series No. 08/2021
Publisher: 
Economics and Econometrics Research Institute (EERI), Brussels
Abstract: 
The paper lists salient characteristics of the certainty theory of consumer choice and discusses the import of prominent empirical analyses of the theory. All of them reject the theory's empirical relevance which suggests that the theory is unfit to analyze consumer choice in an uncertain world. The paper presents an extension of the certainty theory to a theory about consumer choice under uncertainty in which consumer behavior has interesting new properties. I conclude with an empirical test of the empirical relevance of an uncertainty version of Stone's Linear Expenditure System. In the given empirical context Stone's System is empirically relevant.
Subjects: 
Utility function
linear expenditure system
almost ideal demand system
income and substitution effects
expectations' effect
JEL: 
A12
B23
B41
C01
C18
C30
C45
C51
C52
D12
D41
D59
Document Type: 
Working Paper

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