Consumer theory with bounded rational preferences
AbstractAbstract Building on the work of Shafer (1974), this paper provides a continuous bivariate representation theorem for preferences that need not be complete or transitive. Applying this result to the problem of choice from competitive budget sets allows for a proof of the existence of a demand correspondence for a consumer who has preferences within this class that are also convex. Similarly to the textbook theory of utility maximization, this proof also uses the Maximum Theorem. With an additional mild convexity axiom that conceptually parallels uncertainty aversion, the correspondence reduces to a function that satisfies WARP.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 46 (2010)
Issue (Month): 5 (September)
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Web page: http://www.elsevier.com/locate/jmateco
Incomplete & intransitive preferences Representation Demand;
Other versions of this item:
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
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