Revealed preference in a discrete consumption space

Arbeitspapier

We show that an agent maximizing some utility function on a discrete (as opposed to continuous) consumption space will obey the generalized axiom of revealed preference (GARP) so long as the agent obeys cost efficiency. Cost efficiency will hold if there is some good, outside the set of goods being studied by the modeler, that can be consumed by the agent in continuous quantities. An application of Afriat's Theorem then guarantees that there is a strictly increasing utility function on the discrete consumption space that rationalizes price and demand observations in that space.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFS Working Papers ; No. W12/03

Classification and Topics

• Classification: Wirtschaft
• Subject: generalized axiom of revealed preference ; Afriat's Theorem ; discrete demand ; utility maximization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Polisson, Matthew ; Quah, John
• Event: Veröffentlichung
• (who): Institute for Fiscal Studies (IFS)
• (where): London
• (when): 2012

Further information

• DOI: doi:10.1920/wp.ifs.2012.1203
• Handle: http://hdl.handle.net/10419/91519
• Last update: 10.03.2025, 11:41 AM CET