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A general revealed preference theorem for stochastic demand behavior

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Author Info

  • Taradas Bandyopadhyay
  • Indraneel Dasgupta
  • Prasanta Pattanaik

    ()

Abstract

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 Bandyopadhyay, Dasgupta, and Pattanaik (1999) 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. Copyright Springer-Verlag Berlin/Heidelberg 2004

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File URL: http://hdl.handle.net/10.1007/s00199-003-0388-x
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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 23 (2004)
Issue (Month): 3 (March)
Pages: 589-599

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Handle: RePEc:spr:joecth:v:23:y:2004:i:3:p:589-599

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Related research

Keywords: Stochastic choice; Weak axiom of revealed preference; Weak axiom of stochastic revealed preference; Stochastic substitutability; Stochastic substitution theorem.;

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Citations

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Cited by:
  1. Indraneel Dasgupta, . "Contraction consistent stochastic choice correspondence," Discussion Papers 08/04, University of Nottingham, School of Economics.
  2. Heufer, Jan, 2013. "Quasiconcave preferences on the probability simplex: A nonparametric analysis," Mathematical Social Sciences, Elsevier, vol. 65(1), pages 21-30.
  3. Dasgupta Indraneel, 2009. "Supply Theory sans Profit Maximization," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-16, July.
  4. Jan Heufer, 2011. "Stochastic revealed preference and rationalizability," Theory and Decision, Springer, vol. 71(4), pages 575-592, October.
  5. Pavlo Blavatskyy, 2012. "Probabilistic choice and stochastic dominance," Economic Theory, Springer, vol. 50(1), pages 59-83, May.
  6. Dasgupta Indraneel & Pattanaik P. K, 2010. "Revealed Preference with Stochastic Demand Correspondence," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-21, August.
  7. José Alcantud, 2006. "Notes and Comments: Stochastic demand correspondences and their aggregation properties," Decisions in Economics and Finance, Springer, vol. 29(1), pages 55-69, 05.
  8. Jan Heufer, 2009. "Stochastic homothetically revealed preference for tight stochastic demand functions," Economics Bulletin, AccessEcon, vol. 29(3), pages 2472-2477.
  9. J. C. R. Alcantud, 2005. "Stochastic demand correspondences and their aggregation properties," Microeconomics 0501004, EconWPA.
  10. Indraneel Dasgupta & Prasanta Pattanaik, 2007. "‘Regular’ choice and the weak axiom of stochastic revealed preference," Economic Theory, Springer, vol. 31(1), pages 35-50, April.

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