Revealed Preference with Stochastic Demand Correspondence

Indraneel Dasgupta () and Pattanaik P. K
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Pattanaik P. K: University of California, Riverside, prasanta.pattanaik@ucr.edu

The B.E. Journal of Theoretical Economics, 2010, vol. 10, issue 1, 21

Abstract: We extend the revealed preference theory of consumer's behavior originating in Samuelson's Weak Axiom of Revealed Preference to simultaneously permit both non-singleton choice sets and random choice. We provide a consistency postulate for demand behavior when such behavior is represented in terms of a stochastic demand correspondence. When the consumer spends his or her entire wealth, our rationality postulate is equivalent to a condition we term "stochastic substitutability." This equivalence generates as special cases in most of the basic results regarding consumers' demand behavior in the existing revealed preference literature.

Keywords: stochastic demand correspondence; weak axiom of revealed preference; weak axiom of stochastic revealed preference; general substitution theorem; demand theorem; demand aggregation (search for similar items in EconPapers)
Date: 2010
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Working Paper: Revealed Preference with Stochastic Demand Correspondence (2007)
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DOI: 10.2202/1935-1704.1654

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