Rationalizing choice functions with a weak preference

Yuta Inoue ()
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Yuta Inoue: Graduate School of Economics, Waseda University

No 2004, Working Papers from Waseda University, Faculty of Political Science and Economics

Abstract: This paper develops revealed preference analysis of an individual choice model where an agent is a weak preference maximizer, under the assumption that a choice function, rather than a choice correspondence, is observed. In particular, we provide a revealed preference test for such model, and then provide conditions under which we can surely say whether some alternative is indifferent / weakly preferred / strictly preferred to another, solely from the information of the choice function. Furthermore, interpreting a choice correspondence as sets of potential candidates of alternatives that could be chosen from each feasible set, we analyze which alternatives must be, or cannot be a member of the choice correspondence: sharp lower and upper bounds of this underlying choice correspondence are given. As an assumption on observability of data, we assume that the choice function is defined on a non-exhaustive domain, so our results are applicable to data analysis even when only a limited data set is available.

Keywords: Revealed preference; Choice function; Choice correspondence; Weak preference; Bounded rationality (search for similar items in EconPapers)
JEL-codes: D1 D6 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2020-05
New Economics Papers: this item is included in nep-dcm, nep-mic and nep-upt
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