Revealed smooth nontransitive preferences

Hans Keiding; Mich  Tvede

doi:10.1007/s00199-013-0765-z

Revealed smooth nontransitive preferences

Hans Keiding, Mich Tvede

Department of Economics

1 Citation (Scopus)

Abstract

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.

Original language	English
Journal	Economic Theory
Volume	54
Issue number	3
Pages (from-to)	463-484
ISSN	0938-2259
DOIs	https://doi.org/10.1007/s00199-013-0765-z
Publication status	Published - Nov 2013

Keywords

Faculty of Social Sciences
Law of demand
Revealed preferences
GARP
SARP

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10.1007/s00199-013-0765-z

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title = "Revealed smooth nontransitive preferences",

abstract = "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.",

keywords = "Faculty of Social Sciences, Law of demand, Revealed preferences , GARP, SARP",

author = "Hans Keiding and Mich Tvede",

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doi = "10.1007/s00199-013-0765-z",

language = "English",

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T1 - Revealed smooth nontransitive preferences

AU - Keiding, Hans

AU - Tvede, Mich

N1 - JEL Classiﬁcation D1; D5

PY - 2013/11

Y1 - 2013/11

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

SN - 0938-2259

VL - 54

SP - 463

EP - 484

JO - Economic Theory

JF - Economic Theory

IS - 3

ER -

Revealed smooth nontransitive preferences

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Keywords

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