Coursenotes_ECON301

Translation the weak axio says tha if x is eve chosen

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Unformatted text preview: ned by x y th here is som B B su that x, y B and x C(B). me uch d hat tuitive. It sa that "If x is reveale at least ays ed This translation is somewh more int as go as y, th y canno be revea ood hen ot aled preferre to x." ed We r read x y as "x is revealed a least as g s at goos as y." need no be either complete o ot or Notic that the revealed pr ce reference re elation trans sitive. Particularly, for any pair of alternative x, y to be comparab all we ne is that f es e ble eed for so ome B B we have x, y B and either x C(B) or y C(B) or both. d 340 rly hat red there is some B B we e Clear then, we would say th "x is revealed preferr to y" if t have x, y B and x C(B) a y C(B), that is, if x is ever cho d and osen over y w when both are fe easible. EXAMPLE: Rem member our previous example? D the two c Do choice struc ctures satis the weak sfy axiom m? Cons sider the ch hoice structure (B, C1 ( ()). With th choice s his structure we can infer e that... ... x y and x z but the is no re ere evealed pre eference relation that can b inferred b n be between y and z. This choice stru ucture satisfies the weak axiom since y and z are never chosen. e ). e z}) Now, let's think about choice structure (B, C2 ()) Because C2({x, y, z = {x, y} we h have these relationship that can be inferred r ps d: y x x y x z y z use y}) is to efore, the However, becau C2({x, y = {x}, x i revealed preferred t y. There choic structure (B, C2 ()) violates the weak axiom. ce e weak axiom (WARP) restricts the choice be m e ehavior of th consume in much he er The w the s same mann as the ra ner ationality as ssumption f preferen relation This for nce ns. begs the question: What is the relatio s onship betw ween the tw approaches? wo eved to hea that this is a question for furthe study (EC ar s er CON 401, You will be relie ON ECO 601). 341...
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This note was uploaded on 05/25/2010 for the course ECON 301 taught by Professor Sning during the Spring '10 term at University of Warsaw.

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