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Consumer theory with bounded rational preferences

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  • Gerasimou, Georgios

Abstract

The neoclassical consumer maximizes utility and makes choices by completely preordering the feasible alternatives and weighing when indifferent. The consumer studied in this paper chooses by weighing when indifferent and also when indecisive, without necessarily preordering the alternatives or exhausting her budget. Preferences therefore need not be complete, transitive or non-satiated but are assumed strictly convex and "adaptive". The latter axiom is new and parallels that of ambiguity aversion in choice under uncertainty.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18673.

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Date of creation: 28 Jan 2009
Date of revision: 16 Nov 2009
Handle: RePEc:pra:mprapa:18673

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Keywords: preferences: incomplete; intransitive; convex; adaptive; representation; demand.;

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Cited by:
  1. Georgios Gerasimou, 2013. "On continuity of incomplete preferences," Social Choice and Welfare, Springer, vol. 41(1), pages 157-167, June.

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