Mathematical Modeling of Consumer's Preferences Using Partial Differential Equations
AbstractThe aim of this paper is to define consumer's preferences from the differentiable viewpoint in the sense of Debreu. In this framework given the marginal rates of substitution we can consider a vector field to represent consumer's preferences in the microeconomic theory. By definition the marginal rates of substitution satisfy a system of first order partial differential equations. For a continuously differentiable vector field that holds the integrability conditions we provide a general method to solve the system. In the special case of integrable preferences these conditions impose symmetry properties in the underlying preferences. Our results allow to characterize consumer's preferences in terms of the indifference map for the following classes: linear, quasi-linear, separable, homothetic, homothetic and separable. We show that this alternative approach is connected with the traditional formulation concerning the representability of preferences by utility functions. Moreover, we deduce even the general expression of utility functions that satisfy the integrability conditions in the context of ordinal utility.
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 GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2013-15.
Length: 27 pages
Date of creation: May 2013
Date of revision:
Contact details of provider:
Postal: Av. Dias da Silva, 165, 3004-512 COIMBRA
Phone: + 351 239 790 500
Fax: +351 239 403511
Web page: http://gemf.fe.uc.pt/index_en.htm
More information through EDIRC
smooth preferences; marginal rates of substitution; indifference map; ordinal utility; integrability conditions; differential equations.;
Find related papers by JEL classification:
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
This paper has been announced in the following NEP Reports:
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.:
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
- Debreu, Gerard, 1972. "Smooth Preferences," Econometrica, Econometric Society, vol. 40(4), pages 603-15, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sara Santos).
If references are entirely missing, you can add them using this form.