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Revealed preference and indifferent selection

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  • Danan, Eric

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 [Savage, L.J., 1954. The foundations of statistics. John Wiley and Sons] to reveal indifferent selection by considering small monetary perturbations of alternatives is formalized and generalized to a purely topological framework: preferences 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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Suggested Citation

  • Danan, Eric, 2008. "Revealed preference and indifferent selection," Mathematical Social Sciences, Elsevier, vol. 55(1), pages 24-37, January.
    • Handle: RePEc:eee:matsoc:v:55:y:2008:i:1:p:24-37
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    References listed on IDEAS

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    1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    6. Cubitt, Robin P. & Sugden, Robert, 2001. "On Money Pumps," Games and Economic Behavior, Elsevier, vol. 37(1), pages 121-160, October.
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    Cited by:

    1. Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2010. "Objective and Subjective Rationality in a Multiple Prior Model," Econometrica, Econometric Society, vol. 78(2), pages 755-770, March.
    2. repec:hal:psewpa:halshs-01998001 is not listed on IDEAS
    3. Faro, José Heleno & Lefort, Jean-Philippe, 2019. "Dynamic objective and subjective rationality," Theoretical Economics, Econometric Society, vol. 14(1), January.
    4. Ceron, Federica & Vergopoulos, Vassili, 2022. "Objective rationality and recursive multiple priors," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    5. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers 327800275, Lancaster University Management School, Economics Department.
    6. Minardi, Stefania & Savochkin, Andrei, 2015. "Preferences with grades of indecisiveness," Journal of Economic Theory, Elsevier, vol. 155(C), pages 300-331.
    7. Schlee, Edward E. & Ali Khan, M., 2023. "Money-metrics in local welfare analysis: Pareto improvements and equity considerations," Journal of Economic Theory, Elsevier, vol. 213(C).
    8. Kovács, Máté, 2009. "Kinyilvánított preferencia és racionalitás [Declared preference and rationality]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 546-562.
    9. Elias Bouacida, 2021. "Identifying Choice Correspondences," Working Papers halshs-01998001, HAL.
    10. Eric Danan, 2010. "Randomization vs. Selection: How to Choose in the Absence of Preference?," Management Science, INFORMS, vol. 56(3), pages 503-518, March.
    11. Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2008. "Objective and Subjective Rationality," Levine's Working Paper Archive 122247000000001950, David K. Levine.
    12. Kim Kaivanto & Eike Kroll, 2014. "Alternation bias and reduction in St. Petersburg gambles," Working Papers 65600286, Lancaster University Management School, Economics Department.
    13. Faro, José Heleno & Lefort, Jean Philippe, 2013. "Dynamic Objective and Subjective Rationality," Insper Working Papers wpe_312, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.

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

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