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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.

Suggested Citation

  • Gerasimou, Georgios, 2009. "Consumer theory with bounded rational preferences," MPRA Paper 18673, University Library of Munich, Germany, revised 16 Nov 2009.
    • Handle: RePEc:pra:mprapa:18673
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    File URL: https://mpra.ub.uni-muenchen.de/18673/1/MPRA_paper_18673.pdf
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    References listed on IDEAS

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    2. Victor H. Aguiar & Roberto Serrano, 2018. "Cardinal Revealed Preference, Price-Dependent Utility, and Consistent Binary Choice," Working Papers 2018-3, Brown University, Department of Economics.
    3. Metin Uyanik & Aniruddha Ghosh & M. Ali Khan, 2023. "Separately Convex and Separately Continuous Preferences: On Results of Schmeidler, Shafer, and Bergstrom-Parks-Rader," Papers 2310.00531, arXiv.org.
    4. M. Ali Khan & Metin Uyanık, 2021. "Topological connectedness and behavioral assumptions on preferences: a two-way relationship," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 411-460, March.
    5. F. Tao & Y. Cheng & L. Zhang & A. Y. C. Nee, 2017. "Advanced manufacturing systems: socialization characteristics and trends," Journal of Intelligent Manufacturing, Springer, vol. 28(5), pages 1079-1094, June.
    6. Georgios Gerasimou, 2013. "On continuity of incomplete preferences," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(1), pages 157-167, June.

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    More about this item

    Keywords

    preferences: incomplete; intransitive; convex; adaptive; representation; demand.;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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