Non-parametric analysis of optimizing behavior with measurement error

This work considers how one might test observed choice data for consistency with optimizing models in the presence of measurement error and derives an appropriate test statistic and conducts case study involving cost minimization behavior by electric utility plants.

Abstract

We consider how one might test observed choice data for consistency with optimizing models in the presence of measurement error. We derive an appropriate test statistic and conduct case study involving cost minimization behavior by electric utility plants.