Revealed Preference in a Discrete Consumption Space
AbstractWe show that an agent maximizing some utility function on a discrete (as opposed to continuous) consumption space will obey the generalized axiom of revealed preference (GARP) so long as the agent obeys cost efficiency. Cost efficiency will hold if there is some good, outside the set of goods being studied by the modeler, that can be consumed by the agent in continuous quantities. An application of Afriat's Theorem then guarantees that there is a strictly increasing utility function on the discrete consumption space that rationalizes price and demand observations in that space.
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 Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 12/02.
Date of creation: Jan 2012
Date of revision: Feb 2012
Contact details of provider:
Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
Phone: +44 (0)116 252 2887
Fax: +44 (0)116 252 2908
Web page: http://www2.le.ac.uk/departments/economics
More information through EDIRC
Other versions of this item:
- Matthew Polisson & John K.-H. Quah, 2013. "Revealed Preference in a Discrete Consumption Space," American Economic Journal: Microeconomics, American Economic Association, vol. 5(1), pages 28-34, February.
- Matthew Polisson & John Quah, 2012. "Revealed preference in a discrete consumption space," IFS Working Papers W12/03, Institute for Fiscal Studies.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-27 (All new papers)
- NEP-MIC-2012-02-27 (Microeconomics)
- NEP-UPT-2012-02-27 (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.:
- Donald Brown & Caterina Calsamiglia, 2007.
"The Nonparametric Approach to Applied Welfare Analysis,"
Springer, vol. 31(1), pages 183-188, April.
- Donald J. Brown & Caterina Calsamiglia, 2005. "The Nonparametric Approach to Applied Welfare Analysis," Cowles Foundation Discussion Papers 1507, Cowles Foundation for Research in Economics, Yale University.
- Anna Fostel & Herbert E. Scarf & Michael J. Todd, 2003.
"Two New Proofs of Afriat's Theorem,"
Cowles Foundation Discussion Papers
1415, Cowles Foundation for Research in Economics, Yale University.
- 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.
- Herbert E. Scarf & Ana Fostel & Michael J. Todd, 2004. "Two New Proofs of Afriat's Theorem," Yale School of Management Working Papers ysm377, Yale School of Management.
- Francoise Forges & Enrico Minelli, 2006.
"Afriat's Theorem for General Budget Sets,"
ubs0609, University of Brescia, Department of Economics.
- Matthew Polisson, 2011.
"Goods Versus Characteristics: Dimension Reduction and Revealed Preference,"
Discussion Papers in Economics
11/44, Department of Economics, University of Leicester, revised Dec 2011.
- Matthew Polisson, 2011. "Goods Versus Characteristics: Revealed Preference Procedures for Nested Models," Economics Series Working Papers 531, University of Oxford, Department of Economics.
- Matthew Polisson, 2012. "Goods versus characteristics: dimension reduction and revealed preference," IFS Working Papers W12/02, Institute for Fiscal Studies.
- Francoise Forges & Vincent Iehlé, 2013.
"Afriat's Theorem for Indivisible Goods,"
CESifo Working Paper Series
4498, CESifo Group Munich.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mrs. Alexandra Mazzuoccolo).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.