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Revealed Preference with Stochastic Demand Correspondence

Author

Listed:
  • Dasgupta Indraneel

    () (Durham University)

  • Pattanaik P. K

    () (University of California, Riverside)

Abstract

We extend the revealed preference theory of consumers behavior originating in Samuelsons Weak Axiom of Revealed Preference to simultaneously permit both non-singleton choice sets and random choice. We provide a consistency postulate for demand behavior when such behavior is represented in terms of a stochastic demand correspondence. When the consumer spends his or her entire wealth, our rationality postulate is equivalent to a condition we term stochastic substitutability. This equivalence generates as special cases in most of the basic results regarding consumers demand behavior in the existing revealed preference literature.

Suggested Citation

  • Dasgupta Indraneel & Pattanaik P. K, 2010. "Revealed Preference with Stochastic Demand Correspondence," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-21, August.
  • Handle: RePEc:bpj:bejtec:v:10:y:2010:i:1:n:35
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    References listed on IDEAS

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    Cited by:

    1. Indraneel Dasgupta, 2011. "Contraction consistent stochastic choice correspondence," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(4), pages 643-658, October.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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