Coursenotes_ECON301

# Translation the weak axio says tha if x is eve chosen

This preview shows page 1. Sign up to view the full content.

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

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...
View Full Document

## 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.

Ask a homework question - tutors are online