Afriat’s Theorem for General Budget Sets
AbstractAfriat (1967) showed the equivalence 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 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. In an application to market games, we identify a set of observable restrictions characterizing Nash equilibrium outcomes.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1703.
Date of creation: 2006
Date of revision:
GARP; rational choice; revealed preferences; market games; SARP; WARP;
Other versions of this item:
- Forges, FranÃ§oise & Minelli, Enrico, 2009. "Afriat's theorem for general budget sets," Economics Papers from University Paris Dauphine 123456789/4099, Paris Dauphine University.
- Francoise Forges & Enrico Minelli, 2006. "Afriat's Theorem for General Budget Sets," Working Papers, University of Brescia, Department of Economics ubs0609, University of Brescia, Department of Economics.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-03 (All new papers)
- NEP-GTH-2006-06-03 (Game Theory)
- NEP-MIC-2006-06-03 (Microeconomics)
- NEP-UPT-2006-06-03 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 85(5), pages 937-68, October.
- Mas-Colell, Andreu, 1978. "On Revealed Preference Analysis," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 45(1), pages 121-31, February.
- Anna Fostel & Herbert E. Scarf & Michael J. Todd, 2003.
"Two New Proofs of Afriat's Theorem,"
Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University
1415, Cowles Foundation for Research in Economics, Yale University.
- Herbert E. Scarf & Ana Fostel & Michael J. Todd, 2004. "Two New Proofs of Afriat's Theorem," Yale School of Management Working Papers, Yale School of Management ysm377, Yale School of Management.
- M.J. Todd & A. Fostel & H.E. Scarf, 2004. "Two New Proofs of Afriat's Theorem," Econometric Society 2004 North American Summer Meetings 632, Econometric Society.
- Dubey, Pradeep & Sahi, Siddhartha, 2003. "Price-mediated trade with quantity signals: an axiomatic approach," Journal of Mathematical Economics, Elsevier, vol. 39(5-6), pages 377-389, July.
- Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, Econometric Society, vol. 50(4), pages 945-73, July.
- Diewert, W E, 1973. "Afriat and Revealed Preference Theory," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 40(3), pages 419-25, July.
- Franco Spinelli & Carmine Trecroci, . "Le determinanti del tasso di sconto in Italia negli anni 1876-1913: un'analisi empirica e documentale," Working Papers, University of Brescia, Department of Economics ubs0405, University of Brescia, Department of Economics.
- Mas-Colell, Andreu, 1977. "The Recoverability of Consumers' Preferences from Market Demand Behavior," Econometrica, Econometric Society, Econometric Society, vol. 45(6), pages 1409-30, September.
- Chavas, Jean-Paul & Cox, Thomas L, 1993. "On Generalized Revealed Preference Analysis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 108(2), pages 493-506, May.
- Raffaele Miniaci & Maria Laura Parisi, 2005. "Which Plans to Reduce the Digital Divide? Policy Evaluation and Social Interaction," Working Papers, University of Brescia, Department of Economics ubs0509, University of Brescia, Department of Economics.
- Sprumont, Yves, 2000. "On the Testable Implications of Collective Choice Theories," Journal of Economic Theory, Elsevier, Elsevier, vol. 93(2), pages 205-232, August.
- Matzkin, Rosa L, 1991. "Axioms of Revealed Preference for Nonlinear Choice Sets," Econometrica, Econometric Society, Econometric Society, vol. 59(6), pages 1779-86, November.
- Chiara Dalla Nogare & Roberto Ricciuti, . "Chief Executives' Term Limits and Fiscal Policy Choices: International Evidence," Working Papers, University of Brescia, Department of Economics ubs0411, University of Brescia, Department of Economics.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.