Revealed preference and indifferent selection

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Revealed preference and indifferent selection

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Eric Danan

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Eric Danan

Abstract

It is shown that preferences can be constructed from observed choice behavior in a way that is robust to indifferent selection (i.e., the agent is indifferent between two alternatives but, nevertheless, is only observed selecting one of them). More precisely, a suggestion by Savage (1954) to reveal indifferent selection by considering small monetary perturbations of alternatives is formalized and generalized to a purely topological framework: references over an arbitrary topological space can be uniquely derived from observed behavior under the assumptions that they are continuous and nonsatiated and that a strictly preferred alternative is always chosen, and indifferent selection is then characterized by discontinuity in choice behavior. Two particular cases are then analyzed: monotonic preferences over a partially ordered set, and preferences representable by a continuous pseudo-utility function.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 952.

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Date of creation: Apr 2006
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Handle: RePEc:upf:upfgen:952

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Article
- Danan, Eric, 2008. "Revealed preference and indifferent selection," Mathematical Social Sciences, Elsevier, vol. 55(1), pages 24-37, January. [Downloadable!] (restricted)

Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-04-22 (All new papers)
NEP-DCM-2006-04-22 (Discrete Choice Models)
NEP-UPT-2006-04-22 (Utility Models & Prospect Theory)

References listed on IDEAS
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.:

Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, vol. 50(2), pages 255-277, February. [Downloadable!] (restricted)
Sen, Amartya K, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Blackwell Publishing, vol. 38(115), pages 307-17, July. [Downloadable!] (restricted)
Cubitt, Robin P. & Sugden, Robert, 2001. "On Money Pumps," Games and Economic Behavior, Elsevier, vol. 37(1), pages 121-160, October. [Downloadable!] (restricted)
Subiza, Begona & Peris, Josep E., 1998. "Nontrivial pseudo-utility functions," Journal of Mathematical Economics, Elsevier, vol. 29(1), pages 67-73, January. [Downloadable!] (restricted)

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This page was last updated on 2009-12-11.

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