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The transitive core: inference of welfare from nontransitive preference relations

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  • Nishimura, Hiroki

    (Department of Economics, University of California, Riverside)

Abstract

In this paper, we study methods of inferring a decision maker's true preference relation when observed choice data reveal a nontransitive preference relation due to choice mistakes. We propose some sensible properties of such methods and show that these properties characterize a unique rule of inference, called the transitive core. This rule is applied to a variety of nontransitive preference models, such as semiorders on the commodity space, relative discounting time preferences, justifiable preferences over ambiguous acts, regret preferences over risky prospects, and collective preferences induced by majority voting. We show that the transitive core offers a nontrivial and reasonable inference of the decision maker's true preference relation in these contexts.

Suggested Citation

  • Nishimura, Hiroki, 2018. "The transitive core: inference of welfare from nontransitive preference relations," Theoretical Economics, Econometric Society, vol. 13(2), May.
    • Handle: RePEc:the:publsh:1769
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    Cited by:

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    2. Costa, Matheus & Riella, Gil, 2022. "King-chicken choice correspondences," Mathematical Social Sciences, Elsevier, vol. 120(C), pages 113-118.
    3. Caliari, Daniele, 2023. "Behavioural welfare analysis and revealed preference: Theory and experimental evidence," Discussion Papers, Research Unit: Economics of Change SP II 2023-303, WZB Berlin Social Science Center.
    4. Susana Martín-Fernández & Adrián Gómez-Serrano & Eugenio Martínez-Falero & Cristina Pascual, 2018. "Comparison of AHP and a Utility-Based Theory Method for Selected Vertical and Horizontal Forest Structure Indicators in the Sustainability Assessment of Forest Management in the Sierra de Guadarrama N," Sustainability, MDPI, vol. 10(11), pages 1-16, November.
    5. Simone Cerreia-Vioglio & Efe A. Ok, 2018. "The Rational Core of Preference Relations," Working Papers 632, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    6. Sushil Bikhchandani & Uzi Segal, 2021. "Intransitivity in the small and in the large," Journal of Risk and Uncertainty, Springer, vol. 63(3), pages 257-273, December.
    7. Boissonnet, Niels & Ghersengorin, Alexis & Gleyze, Simon, 2020. "Revealed Deliberate Preference Changes," MPRA Paper 101756, University Library of Munich, Germany.
    8. Guy Barokas & Burak Ünveren, 2022. "Impressionable Rational Choice: Revealed-Preference Theory with Framing Effects," Mathematics, MDPI, vol. 10(23), pages 1-19, November.
    9. Aditya Kuvalekar, 2022. "Matching with Incomplete Preferences," Papers 2212.02613, arXiv.org, revised Nov 2023.
    10. Nobuo Koida, 2021. "Intransitive indifference with direction-dependent sensitivity," KIER Working Papers 1061, Kyoto University, Institute of Economic Research.
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    12. Florian Brandl & Felix Brandt, 2020. "Arrovian Aggregation of Convex Preferences," Econometrica, Econometric Society, vol. 88(2), pages 799-844, March.
    13. Uyanık, Metin & Khan, M. Ali, 2019. "On the consistency and the decisiveness of the double-minded decision-maker," Economics Letters, Elsevier, vol. 185(C).

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    More about this item

    Keywords

    Nontransitive preferences; welfare; bounded rationality;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General

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