Revealed smooth nontransitive preferences
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Revealed smooth nontransitive preferences. / Keiding, Hans; Tvede, Mich .
I: Economic Theory, Bind 54, Nr. 3, 2013, s. 463-484 .Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Revealed smooth nontransitive preferences
AU - Keiding, Hans
AU - Tvede, Mich
N1 - JEL Classification D1; D5
PY - 2013
Y1 - 2013
N2 - In the present paper, we are concerned with the behavioural consequences of consumers having nontransitive preference relations. Data sets consist of finitely many observations of price vectors and consumption bundles. A preference relation rationalizes a data set provided that for every observed consumption bundle, all strictly preferred bundles are more expensive than the observed bundle. Our main result is that data sets can be rationalized by a smooth nontransitive preference relation if and only if prices can normalized such that the law of demand is satisfied. Market data sets consist of finitely many observations of price vectors, lists of individual incomes and aggregate demands. We apply our main result to characterize market data sets consistent with equilibrium behaviour of pure-exchange economies with smooth nontransitive consumers.
AB - In the present paper, we are concerned with the behavioural consequences of consumers having nontransitive preference relations. Data sets consist of finitely many observations of price vectors and consumption bundles. A preference relation rationalizes a data set provided that for every observed consumption bundle, all strictly preferred bundles are more expensive than the observed bundle. Our main result is that data sets can be rationalized by a smooth nontransitive preference relation if and only if prices can normalized such that the law of demand is satisfied. Market data sets consist of finitely many observations of price vectors, lists of individual incomes and aggregate demands. We apply our main result to characterize market data sets consistent with equilibrium behaviour of pure-exchange economies with smooth nontransitive consumers.
KW - Faculty of Social Sciences
KW - Law of demand
KW - Revealed preferences
KW - GARP
KW - SARP
U2 - 10.1007/s00199-013-0765-z
DO - 10.1007/s00199-013-0765-z
M3 - Journal article
VL - 54
SP - 463
EP - 484
JO - Economic Theory
JF - Economic Theory
SN - 0938-2259
IS - 3
ER -
ID: 82305879