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Unformatted text preview: “If you put a baseball and other toys in front of a baby, he’ll pick up a baseball in preference to the others.” Tris Speaker ECON 410 Preferences SelfClicker eRecitation Question (3 pts): Without using calculators, find df/dx where 1. df/dx= 2. df/dx= 3. df/dx= 4. df/dx= 0% 0% 0% 0% 2 ( ) ln[ exp(3 )] f x x x = 2 1 exp(3 ) x x 1 6 x x + x 2 6 exp(3 ) x x x 3 Class 4 – Foundations of Preferences 4 Something behaves according to a functional specification What is the best choice ? ? Class 4 – Foundations of Preferences 5 How do people make a choice ? Class 4 – Foundations of Preferences 6 Class 4 – Foundations of Preferences SelfClicker Question (P): Which concert would you rather attend? 1 2 3 4 5 0% 0% 0% 0% 0% 1. Lady Gaga 2. J ayZ/Kanye West 3. The Mars Volta 4. Carrie Underwood 5. Slayer 8 Preference Relation: Given two bundles, a and b , define a preference relation , ,as follows: ﾱ ﾱ if and only if (iff) is at least as good as . If this relationship holds, we say For an individual, "a is preferred to b" a b a b ﾱ Example: Baltimore Ravens Pittsburgh Steelers means “To me, I like the Ravens as least as much as I like the Steelers” Class 4 – Foundations of Preferences 9 Class 4 – Foundations of Preferences ﾱ Vacation Education 10 ﾱ ﾱ ﾱ ﾱ Baltimore Ravens Pittsburgh Steelers Baltimore Orioles New York Yankees Anyone else New York Yankees Curb Your Enthusiasm Two and a Half Men Define “a b” as “a is preferred to b” Class 4 – Foundations of Preferences 11 ﾱ ﾱ ﾱ ﾱ Baltimore Ravens Pittsburgh Steelers Baltimore Orioles New York Yankees Anyone else New York Yankees Curb Your Enthusiasm Two and a Half Men Define “a b” as “a is preferred to b” Class 4 – Foundations of Preferences 12 Preference Relation: ﾱ DOES NOT MEA N a a b b ﾱ Example: 6 graded HW assignments 10 graded HW assignments Class 4 – Foundations of Preferences 13 Preference Relation: ﾱ Example: (Me) 10 graded HW assignments 6 graded HW assignments (You) 10 graded HW assignments 6 graded HW assignments ﾱ A preference relation is specific to an individual. Class 4 – Foundations of Preferences GroupClicker Question (P): Which type of bundle does NOT make sense if 1 3 1 2 3 4 0% 0% 0% 0% 0 % 1 0 % 2 0 % 3 0 % 4 0 % 5 0 % 6 0 % 7 0 % 8 0 % 9 0 % 1 0 0 % ﾱ 1. Punches to the head 2. Grades of “F” 3. Dollars 4. Speeding tickets GroupClicker Question (P): Which type of bundle does NOT make sense if 2 5 1 2 3 4 0% 0% 0% 0% 0 % 1 0 % 2 0 % 3 0 % 4 0 % 5 0 % 6 0 % 7 0 % 8 0 % 9 0 % 1 0 0 % ﾱ 1. Days on vacation 2. Dates with a person you really like 3. Kicks to the shin 4. Millions of dollars 16 Strict Preference Relation: Given two bundles, a and b , define a strict preference relation , ,as follows: f f if and only if (iff) is better than . If this relationship holds, we say "a is st For an individual,...
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 Fall '07
 Codrin
 Preorder, preference relation

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