From revealed preference to preference revelation

Modern Economy, 2012

We consider a practical market model in which all commodities are inherently indivisible and thus are traded in integer quantities, or consumption choices are available only in discrete quantities. We ask whether a finite set of price-quantity observations satisfying the Generalized Axiom of Revealed Preference (GARP) is consistent with utility maximization. Due to the absence of perfect divisibility and continuity, the existing argument and also familiar assumptions such as non-satiation cannot be used in the current discrete model. We develop a new approach to deal with this problem and establish a discrete analogue of Afrita's celebrated theorem. We also introduce a new concept called tight budget demand set which is a natural refinement of the standard notion of demand set and plays a crucial role in the current analysis. Exploring network structure and a new and easy-to-use variant of GARP, we propose an elementary, simple, combinatorial and constructive proof for our result.

OEconomia, 2017

SSRN Electronic Journal

We provide a representation theorem for revealed preference of an agent whose consumption set is contained in a general topological space (separable Hausdorff space). We use this result to construct a revealed preference test that applies to choice over infinite consumption streams and probability distribution spaces, among other cases of interest in economics. In particular, we construct a revealed preference test for best-responding behavior in strategic games.

Modelling and Simulation, 2009

A utility function u : R n + := x ∈ R n | x i ≥ 0 for all i → R := R∪ {−∞} is often used to reflect the preference structure with respect to possible consumption of n commodities, denoted by a vector x ∈ R n + each of which are priced according to an associated vector of prices p ∈ R n + . We assume that it may take the value −∞ so as to allow for implicit constraints in the framing of associated optimization problems. It is well known that one can define a preference relation yRx, "y is preferred to x", via a utility using

Economic Theory, 2004

We present a general revealed preference theorem concerning stochastic choice behavior by consumers. We show that, when the consumer spends her entire wealth, the Weak Axiom of Stochastic Revealed Preference due to is equivalent to a restriction on stochastic demand behavior that we call stochastic substitutability. We also show that the relationship between the Weak Axiom of Revealed Preference and Samuelson's inequality in the deterministic theory, and the main result of Bandyopadhyay, Dasgupta, and Pattanaik (1999) are both special cases of our result.

The B.E. Journal of Theoretical Economics, 2000

We extend the revealed preference theory of consumer’s behavior originating in Samuelson’s Weak Axiom of Revealed Preference to simultaneously permit both non-singleton choice sets and random choice. We provide a consistency postulate for demand behavior when such behavior is represented in terms of a stochastic demand correspondence. When the consumer spends his or her entire wealth, our rationality postulate is equivalent to a condition we term “stochastic substitutability.” This equivalence generates as special cases in most of the basic results regarding consumers’ demand behavior in the existing revealed preference literature.

2018

OF THE DISSERTATION Three Essays in the Theory of Preferences by SEYED HASSAN NOSRATABADI Dissertation Director: Oriol Carbonell-Nicolau This dissertation consists of three chapters. The first chapter addresses the classical questions of utility representation and maximization. It relaxes the notion of weak upper continuity (Campbell and Walker (1990)) to obtain a property called partial weak upper continuity and shows that both maximization of preferences and representation by a utility function can be achieved under this new property. The rest of this dissertation focuses on extending revealed preference theory to accommodate behavioral anomalies observed in the experimental data. In particular, I offer a framework to expand the theory of revealed preferences to the case where a DM’s choice is not completely identified with a single preferences. In Chapter 2, I use a divide and conquer procedure in order to expand the revealed preference theory to accommodate behavioral anomalies ...

In this article, we study the axiomatic foundations of revealed preference theory. Let P denote the strict and R the weak revealed preference, respectively. The purpose of the paper is to show that weak, strong, and Hansson's axiom of revealed preference can be given as c P m = c R g , c

Quarterly Journal of Economics, 2009

Economics Meetings, for useful comments. We are also indebted to Xiaochen Fan and Eduardo Perez for able research assistance. Bernheim gratefully acknowledges financial support from the NSF (SES-0452300 and SES-0752854). Rangel gratefully acknowledges financial support from the NSF (SES-0134618) and the Moore Foundation. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Theory and Decision, 2008

We propose two different characterizations for preference relations representable by lower (upper) expectations with the aim of removing either fair price or completeness requirements. Moreover, we give an explicit characterization for comparative degrees of belief on a finite algebra of events representable by lower probabilities.

SSRN Electronic Journal, 2019

We provide a generalized revealed preference test for quasilinear preferences. The test applies to nonlinear budget sets and non-convex preferences as those found in taxation and nonlinear pricing contexts. We study the prevalence of quasilinear preferences in a laboratory real-effort task experiment with nonlinear wages. The experiment demonstrates the empirical relevance of our test. We find support for either convex (non-separable) preferences or quasilinear preferences but weak support for the hypothesis of both quasilinear and convex preferences.

2021

We propose and develop an algebraic approach to revealed preference. Our approach dispenses with non algebraic structure, such as topological assumptions. We provide algebraic axioms of revealed preference that subsume previous, classical revealed preference axioms, as well as generate new axioms for behavioral theories, and show that a data set is rationalizable if and only if it is consistent with an algebraic axiom.

2012

In this appendix, we provide a proof of the maximal domain result (Theorem 7) of "Stability and Competitive Equilibrium in Trading Networks." We also provide the counterexamples referenced in Section 4.2 of "Stability and Competitive Equilibrium in Trading Networks."