Chapter Seven Revealed Preference 显示偏好 Revealed Preference Analysis Suppose we observe the demands (consumption choices) that a consumer makes for different budgets. This reveals information about the consumer’s preferences. We can use this information to ... Revealed Preference Analysis Test the behavioral hypothesis that a consumer chooses the most preferred bundle from those available. Discover the consumer’s preference relation. Assumptions on Preferences Preferences do not change while the choice data are gathered. are strictly convex. are monotonic. Together, convexity and monotonicity imply that the most preferred affordable bundle is unique. Assumptions on Preferences x2 x1 x1* x2* If preferences are convex and monotonic (. well-behaved) then the most preferred affordable bundle is unique. Direct Preference Revelation Suppose that the bundle x* is chosen when the bundle y is affordable. Then x* is directly revealed preferred to y (otherwise y would have been chosen). x*直接显示偏好于y Direct Preference Revelation x2 x1 x* y The chosen bundle x* is directly revealed preferred to the bundles y and z. z Direct Preference Revelation That x is directly revealed preferred to y will be written as x y. D p Indirect Preference Revelation Suppose x is revealed directly preferred to y, and y is revealed directly preferred to z. Then, by transitivity, x is indirectly revealed preferred to z. Write this as x z so x y and y z x z. D p D p I p I p Indirect Preference Revelation x2 x1 x* z z is not affordable when x* is chosen.
