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A Unified Approach to Revealed Preference Theory: The Case of Rational Choice

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  • John Quah
  • Hiroki Nishimura
  • Efe A. Ok

Abstract

The theoretical literature on (non-random) choice largely follows the route of Richter (1966) by working in abstract environments and by stipulating that we see all choices of an agent from a given feasible set. On the other hand, empirical work on consumption choice using revealed preference analysis is done following the approach of Afriat (1967), which assumes that we observe only one (and not necessarily all) of the potential choices of an agent. These two approaches are structurally different and they are treated in the literature in isolation from each other. This paper introduces a framework in which both approaches can be formulated in tandem. We prove a rationalizability theorem in this framework that simultaneously generalizes the fundamental results of Afriat and Richter, along with many of their variants.

Suggested Citation

  • John Quah & Hiroki Nishimura & Efe A. Ok, 2013. "A Unified Approach to Revealed Preference Theory: The Case of Rational Choice," Economics Series Working Papers 686, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:686
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    References listed on IDEAS

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    1. Sam Cosaert & Thomas Demuynck, 2015. "Revealed preference theory for finite choice sets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 169-200, May.
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    5. Forges, Françoise & Minelli, Enrico, 2009. "Afriat's theorem for general budget sets," Journal of Economic Theory, Elsevier, vol. 144(1), pages 135-145, January.
    6. Halevy, Yoram & Persitz, Dotan & Zrill, Lanny, 2012. "Parametric Recoverability of Preferences," Microeconomics.ca working papers yoram_halevy-2012-20, Vancouver School of Economics, revised 28 Aug 2015.
    7. Efe A. Ok & Lin Zhou, 1999. "Revealed group preferences on non-convex choice problems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(3), pages 671-687.
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    Cited by:

    1. Victor Aguiar & Roberto Serrano, 2015. "Slutsky Matrix Norms and Revealed Preference Tests of Consumer Behaviour," Working Papers 2015-1, Brown University, Department of Economics.
    2. Dziewulski, Pawel, 2014. "Revealed time-preference," MPRA Paper 56596, University Library of Munich, Germany.
    3. Pawel Dziewulski, 2015. "Revealed time-preference," Economics Series Working Papers 748, University of Oxford, Department of Economics.

    More about this item

    Keywords

    Revealed Preference; Rational Choice; Afriat's Theorem; Richter's Theorem;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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