Inverse Problems in Economics

Suzhou Huang

Outline

Motivation: Importance of consumer preference

Motivation: Data analysis in different contexts

Forward Map: Theory of Rational Choice

Inverse Map: Theory of Revealed Preference

Degree of Inversion: What can be extracted?

Practice in Econometric Applications

Sources of Uncertainty

Discrete-choice Models: Decision making

Discrete-choice Models: Consumer preference

Endogeneity problem

Model misspecification problem

A stylized model

Modeling procedure

Segmentation pattern

Regression Result: the Correct Model

Regression Result: the ND model

Regression result: the Logit Model

Conclusion