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Unformatted text preview: b are preferable to d ). Convexity is meant to capture related intuitions that rely on the existence of geography in the sense that we can talk about an alternative being between two other alternatives. The convexity assumption is appropriate for a situation in which the argument if a move from d to b is an improvement then so is a move part of the way to c is legitimate, while the argument if a move from b to d is harmful then so is a move part of the way to c is not. ollowing are two formalizations of these two intuitions (Fg. 4.2). We will see that they are equivalent. Convexity 1: The preference relation % satisFes convexity 1 if x % y and ( 0, 1 ) implies that x + ( 1 ) y % y . This captures the intuition that if x is preferred to y , then going a part of the way from y to x is also an improvement....
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This note was uploaded on 12/29/2011 for the course ECO 443 taught by Professor Aswa during the Fall '10 term at SUNY Stony Brook.
- Fall '10