Structures of rational behavior in economics

Susanne Fuchs-Seliger

No 136, Working Paper Series in Economics from Karlsruhe Institute of Technology (KIT), Department of Economics and Management

Abstract: Describing individual behavior, we will be concerned with an axiom system, which can be interpreted by Shephard's distance function. Based on this function, one can discover the individual's preference relation, from which the individual's demand function can be derived. We will realize that the axiom system describes rational behavior, satisfying the Strong Axiom of Revealed Preference. The axiom system presented in this article is closely related to a former one describing consumer behavior by income compensation functions. These different approaches will help to illuminate choice behavior from different points of view. We will also see that the axiom system presented in this article can be interpreted by the economic quantity index in welfare theory and by distance functions in producer theory.

Keywords: Economic Models; Demand Functions; Distance Functions; Rationality; Producer Theory; Welfare Theory (search for similar items in EconPapers)
JEL-codes: C78 D71 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-evo, nep-ore and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kitwps:136

DOI: 10.5445/IR/1000098471

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