Transcription of Revealed Preferences and Utility Functions
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Revealed Preferences and Utility Functions
Revealed Preferences and Utility Functions Lecture 2, 29 August Econ 2100 Fall 2018. Outline 1 Weak Axiom of Revealed preference 2 Equivalence between Axioms and Rationalizable Choices. 3 An Application: the Law of Compensated Demand. 4 Utility Function De nitions From Last Class A preference relation % is a complete and transitive binary relation on X . describes DM's ranking of all possible pairs of options. A choice rule for X is a correspondence C : 2X n f;g ! X such that C (A) A. for all A X . describes DM's possible choices from each menu.
De–nitions From Last Class Apreference relation % is a complete and transitive binary relation on X. describes DM™s ranking of all possible pairs of options.
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