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

Author

Listed:
  • Hiroki Nishimura

    (Department of Economics, University of California Riverside)

  • Efe A. Ok

    (New York University)

  • John K.-H. Quah

    (Oxford University)

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.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Hiroki Nishimura & Efe A. Ok & John K.-H. Quah, 2014. "A Unified Approach to Revealed Preference Theory: The Case of Rational Choice," Working Papers 201418, University of California at Riverside, Department of Economics.
    • Handle: RePEc:ucr:wpaper:201418
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    References listed on IDEAS

    as
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    Cited by:

    1. Dziewulski, Paweł, 2018. "Revealed time preference," Games and Economic Behavior, Elsevier, vol. 112(C), pages 67-77.
    2. Dziewulski, Pawel, 2014. "Revealed time-preference," MPRA Paper 56596, University Library of Munich, Germany.
    3. Simone Cerreia-Vioglio & David Dillenberger & Pietro Ortoleva & Gil Riella, 2019. "Deliberately Stochastic," American Economic Review, American Economic Association, vol. 109(7), pages 2425-2445, July.
      • Simone Cerreia-Vioglio & David Dillenberger & Pietro Ortoleva & Gil Riella, 2012. "Deliberately Stochastic," PIER Working Paper Archive 17-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 25 May 2017.
    4. M. Ali Khan & Edward E. Schlee, 2016. "On Lionel McKenzie's 1957 intrusion into 20th‐century demand theory," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 589-636, May.
    5. Thomas Demuynck & Christian Seel, 2018. "Revealed Preference with Limited Consideration," American Economic Journal: Microeconomics, American Economic Association, vol. 10(1), pages 102-131, February.
    6. Victor Aguiar & Roberto Serrano, 2015. "Slutsky Matrix Norms and Revealed Preference Tests of Consumer Behaviour," Working Papers 2015-1, Brown University, Department of Economics.
    7. Victor H. Aguiar & Roberto Serrano, 2018. "Classifying bounded rationality in limited data sets: a Slutsky matrix approach," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(4), pages 389-421, November.

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    More about this item

    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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