Exact inference from finite market data

TL;DR

This paper establishes conditions for precisely inferring individual choices and market equilibrium outcomes from finite market data, including demand and price observations, enabling exact identification of demand functions and equilibrium changes.

Contribution

It introduces novel conditions under which individual demands and Walrasian equilibrium can be exactly recovered from limited market data, advancing inference methods in market analysis.

Findings

Exact inference of individual demands from demand-price data

Identification of equilibrium from finite endowment and price observations

Conditions for precise recovery of market equilibrium and comparative statics

Abstract

We develop conditions under which individual choices and Walrasian equilibrium prices and allocations can be exactly inferred from finite market data. First, we consider market data that consist of individual demands as prices and incomes change. Second, we show that finitely many observations of individual endowments and associated Walrasian equilibrium prices, and only prices, suffice to identify individual demands and, as a consequence, equilibrium comparative statics.