Afriat's theorem for general budget sets

Francoise Forges and Enrico Minelli

Journal of Economic Theory, 2009, vol. 144, issue 1, 135-145

Abstract: Afriat proved the equivalence of a variant of the strong axiom of revealed preference and the existence of a solution to a set of linear inequalities. From this solution he constructed a utility function rationalizing the choices of a competitive consumer. We extend Afriat's theorem to a class of nonlinear, nonconvex budget sets. We thereby obtain testable implications of rational behavior for a wide class of economic environments, and a constructive method to derive individual preferences from observed choices. We also show that by increasing in a regular way the number of observed choices from our class of budget sets one can fully identify the underlying preference relation.

Keywords: GARP; Rational; choice; Revealed; preferences; SARP; WARP (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (102)

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Working Paper: Afriat’s Theorem for General Budget Sets (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:144:y:2009:i:1:p:135-145

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