IDEAS home Printed from https://ideas.repec.org/p/ete/ceswps/515975.html

Transitivity of preferences: when does it matter?

Author

Listed:
  • Laurens Cherchye
  • Thomas Demuynck
  • Bram De Rock

Abstract

We define the empirical conditions on prices and incomes under which transitivity of preferences has specific testable implications. In particular, we set out necessary and sufficient requirements for budget sets under which consumption choices can violate SARP (Strong Axiom of Revealed Preferences) but not WARP (Weak Axiom of Revealed Preferences). As SARP extends WARP by additionally imposing transitive preferences, this effectively defines the conditions under which transitivity is separately testable. Our findings have considerable practical relevance, as transitivity conditions are known to substantially aggravate the computational burden of empirical revealed preference analysis. Our characterization takes the form of triangular conditions that must hold for all three-element subsets of normalized prices, and which are easy to verify in practice. We demonstrate their practical use through two short empirical applications.

Suggested Citation

  • Laurens Cherchye & Thomas Demuynck & Bram De Rock, 2015. "Transitivity of preferences: when does it matter?," Working Papers of Department of Economics, Leuven 515975, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:515975
    as

    Download full text from publisher

    File URL: https://lirias.kuleuven.be/bitstream/123456789/515975/1/DPS1530.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Christopher P. Chambers & John Rehbeck, 2022. "Nonparametric market supply with variable participants," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(3), pages 899-921, October.
    3. Khushboo Surana, 2022. "How different are we? Identifying the degree of revealed preference heterogeneity," Discussion Papers 22/09, Department of Economics, University of York.
    4. Takashi Kunimoto & Roberto Serrano, 2020. "Rationalizable Incentives: Interim Implementation of Sets in Rationalizable Strategies," Economics and Statistics Working Papers 4-2020, Singapore Management University, School of Economics.
    5. Thomas Demuynck & Tom Potoms & Morgane Rigaux, 2024. "Choice Dominance and Single Crossing Indifference Curves: a Revealed Preference Analysis," Working Papers ECARES 2024-23, ULB -- Universite Libre de Bruxelles.
    6. 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.
    7. Alvaro Sandroni & Leo Katz, 2024. "The leveling axiom," Theory and Decision, Springer, vol. 96(1), pages 135-152, February.
    8. Cherchye, Laurens & Demuynck, Thomas & Rock, Bram De, 2019. "Bounding counterfactual demand with unobserved heterogeneity and endogenous expenditures," Journal of Econometrics, Elsevier, vol. 211(2), pages 483-506.
    9. Wilfried Youmbi, 2024. "Nonparametric Analysis of Random Utility Models Robust to Nontransitive Preferences," Papers 2406.13969, arXiv.org.
    10. Zhibin Wu & Rong Yuan & Jiancheng Tu, 2021. "Group Decision Making with Transitive Preferences Under Ordinal and Cardinal Consistencies: An Optimization Approach," Group Decision and Negotiation, Springer, vol. 30(1), pages 221-250, February.
    11. Florian Gunsilius & Lonjezo Sithole, 2025. "Nonparametric Testability of Slutsky Symmetry," Papers 2505.05603, arXiv.org, revised Jul 2025.
    12. Sam Cosaert, 2019. "What Types are There?," Computational Economics, Springer;Society for Computational Economics, vol. 53(2), pages 533-554, February.
    13. Laurens Cherchye & Dieter Saelens & Reha Tuncer, 2024. "From unobserved to observed preference heterogeneity: a revealed preference methodology," Economica, London School of Economics and Political Science, vol. 91(363), pages 996-1022, July.
    14. Aguiar, Victor H. & Hjertstrand, Per & Serrano, Roberto, 2020. "A Rationalization of the Weak Axiom of Revealed Preference," Working Paper Series 1321, Research Institute of Industrial Economics.

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ete:ceswps:515975. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: library EBIB (email available below). General contact details of provider: https://feb.kuleuven.be/Economics/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.