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An ordinal theorem of the maximum

Author

Listed:
  • Marek Weretka

    (University of Wisconsin-Madison
    Group for Research in Applied Economics (GRAPE))

Abstract

This paper extends the notion of equivalent variation, Hicks (1939) to an abstract decision problem. It also provides a modern, ordinal variant of the maximum theorem, Berge (1963) that formulates the assumptions in terms of underlying preferences and demonstrates the continuity of the classic preference-based welfare indices (i.e., the equivalent and compensating variations) as well as the upper hemicontinuity of the choice correspondence. We then apply the theorem to the relevant economic problems.

Suggested Citation

  • Marek Weretka, 2021. "An ordinal theorem of the maximum," GRAPE Working Papers 61, GRAPE Group for Research in Applied Economics.
    • Handle: RePEc:fme:wpaper:61
    as

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    File URL: http://grape.org.pl/WP/61_Weretka_website.pdf
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    References listed on IDEAS

    as
    1. Efe A. Ok, 2007. "Preliminaries of Real Analysis, from Real Analysis with Economic Applications," Introductory Chapters, in: Real Analysis with Economic Applications, Princeton University Press.
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    More about this item

    Keywords

    Maximum Theorem; equivalent variation; ordinal convergence;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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