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Revealed preference and indifferent selection

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Listed author(s):
  • Eric Danan

    ()

    (THEMA - Théorie économique, modélisation et applications - Université de Cergy Pontoise - CNRS)

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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File URL: https://hal.archives-ouvertes.fr/hal-00872255/document
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Paper provided by HAL in its series Post-Print with number hal-00872255.

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Date of creation: 2008
Publication status: Published in Mathematical Social Sciences, Elsevier, 2008, 55, pp.24-37. <10.1016/j.mathsocsci.2006.12.005>
Handle: RePEc:hal:journl:hal-00872255
DOI: 10.1016/j.mathsocsci.2006.12.005
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00872255
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

Keywords: Revealed preference; Indifference; Continuity; Nonsatiation; Monotonicity; Pseudo-utility;

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Find related papers by JEL classification:
  • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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  1. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
  2. Subiza, Begona & Peris, Josep E., 1998. "Nontrivial pseudo-utility functions," Journal of Mathematical Economics, Elsevier, vol. 29(1), pages 67-73, January.
  3. Amartya K. Sen, 1971. "Choice Functions and Revealed Preference," Review of Economic Studies, Oxford University Press, vol. 38(3), pages 307-317.
  4. Mandler, Michael, 2005. "Incomplete preferences and rational intransitivity of choice," Games and Economic Behavior, Elsevier, vol. 50(2), pages 255-277, February.
  5. 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. Minardi, Stefania & Savochkin, Andrei, 2015. "Preferences with grades of indecisiveness," Journal of Economic Theory, Elsevier, vol. 155(C), pages 300-331.
  2. 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, 03.
  3. 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.
  4. Eric Danan, 2010. "Randomization vs. Selection: How to Choose in the Absence of Preference?," Management Science, INFORMS, vol. 56(3), pages 503-518, March.
  5. Kim Kaivanto & Eike Kroll, 2014. "Alternation bias and reduction in St. Petersburg gambles," Working Papers 65600286, Lancaster University Management School, Economics Department.
  6. 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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