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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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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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Cited by:
  1. Dasgupta, Indraneel, 2009. "Supply Theory sans Profit-Maximization," IZA Discussion Papers 4018, Institute for the Study of Labor (IZA).
  2. Jan Heufer, 2011. "Stochastic revealed preference and rationalizability," Theory and Decision, Springer, vol. 71(4), pages 575-592, October.
  3. 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.
  4. WILLIAM J. McCAUSLAND, 2009. "Random Consumer Demand," Economica, London School of Economics and Political Science, vol. 76(301), pages 89-107, 02.
  5. Pavlo Blavatskyy, 2012. "Probabilistic choice and stochastic dominance," Economic Theory, Springer, vol. 50(1), pages 59-83, May.
  6. 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.
  7. Indraneel Dasgupta, 2011. "Contraction consistent stochastic choice correspondence," Social Choice and Welfare, Springer, vol. 37(4), pages 643-658, October.
  8. J. C. R. Alcantud, 2003. "Stochastic demand correspondences and their aggregation properties," Microeconomics 0309001, EconWPA, revised 08 Jan 2005.
  9. Ruediger Bachmann, 2006. "Testable Implications of Pareto Efficiency and Individualrationality," Economic Theory, Springer, vol. 29(3), pages 489-504, November.
  10. Aditi Bhattacharyya & Prasanta K. Pattanaik & Yongsheng Xu, 2010. "Choice, internal consistency, and rationality," Working Papers 1011, Sam Houston State University, Department of Economics and International Business.
  11. Jan Heufer, 2009. "Stochastic homothetically revealed preference for tight stochastic demand functions," Economics Bulletin, AccessEcon, vol. 29(3), pages 2472-2477.
  12. 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.
  13. Heufer, Jan, 2013. "Quasiconcave preferences on the probability simplex: A nonparametric analysis," Mathematical Social Sciences, Elsevier, vol. 65(1), pages 21-30.

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