Afriat's theorem for general budget sets
Afriat proved the equivalence of a variant of the strong axiom of revealed preference and the existence of a solution to a set of linear inequalities. From this solution he constructed a utility function rationalizing the choices of a competitive consumer. We extend Afriat's theorem to a class of nonlinear, nonconvex budget sets. We thereby obtain testable implications of rational behavior for a wide class of economic environments, and a constructive method to derive individual preferences from observed choices. We also show that by increasing in a regular way the number of observed choices from our class of budget sets one can fully identify the underlying preference relation.
Year of publication: |
2009
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Authors: | Forges, Françoise ; Minelli, Enrico |
Published in: |
Journal of Economic Theory. - Elsevier, ISSN 0022-0531. - Vol. 144.2009, 1, p. 135-145
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Publisher: |
Elsevier |
Keywords: | GARP Rational choice Revealed preferences SARP WARP |
Saved in:
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