Revealed Preference with Stochastic Demand Correspondence
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.
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Volume (Year): 10 (2010)
Issue (Month): 1 (August)
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