{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

101A_lec5

# 101A_lec5 - Economics 101A(Lecture 5 Stefano DellaVigna...

This preview shows pages 1–6. Sign up to view the full content.

Economics 101A (Lecture 5) Stefano DellaVigna February 3, 2009

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Outline 1. Properties of Preferences 2. From Preferences to Utility (and viceversa) 3. Common Utility Functions 4. Utility maximization
1 Properties of Preferences Nicholson, Ch. 3, pp. 87-88 (69-70, 9th) Commodity set X (apples vs. strawberries, work vs. leisure, consume today vs. tomorrow) Preference relation º over X A preference relation º is rational if 1. It is complete : For all x and y in X, either x º y, or y º x or both 2. It is transitive : For all x, y, and z, x º y and y º z implies x º z Preference relation º is continuous if for all y in X, the sets { x : x º y } and { x : y º x } are closed sets.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Example: X = R 2 with map of indi ff erence curves Counterexamples: 1. Incomplete preferences. Dominance rule. 2. Intransitive preferences. Quasi-discernible di ff er- ences. 3. Discontinuous preferences. Lexicographic order
Indi ff erence relation : x y if x º y and y º x Strict preference: x Â y if x º y and not y º x Exercise. If

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 16

101A_lec5 - Economics 101A(Lecture 5 Stefano DellaVigna...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online