Unformatted text preview: ual snob, he refuses to give us an answer. Because he’s unwilling to rank these DJs we
cannot model his behavior.
Our second consumer is DJ Ajax still clubbing at the ripe old age of 75. His responses are:
ECO 204 CHAPTER 2 Modeling Consumer Choice and Behavior: Preferences and Budget Constraints (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. ⏟ ⏟ ⏟ Notice that DJ Ajax is able to rank all “bundles” of DJs (i.e. Ajax has “complete preferences”) and that his preferences are
logical (i.e. Ajax has “transitive preferences”) because if he tells us that:
Then if his rankings are logical it should be that Art Department Seth Troxler: indeed, that’s exactly what he told us so
that his preferences are logical (they have to be; he didn’t go to Ryerson).
Our last consumer is DJ Rye-high, who is a DJ at night and while he’s supposed to be a student at Ryerson University by
day, he’s also a DJ by day. His responses are:
⏟ ⏟ ⏟ Notice that DJ Rye-high is also able to rank all “bundles” of DJs (i.e. Rye-High has “complete preferences”) but unlike DJ
Ajax (at U of T), Rye-high’s preferences are illogical (i.e. Rye-High has “intransitive preferences”) because when tells us
However, DJ Rye-high tells us that Tiesto
illogical. Seth Troxler. Thus, while Rye-high is able to rank all bundles his rankings are Here’s another example which shows how consumers aren’t always able (or willing to) indicate their preferences and
even if they are able to, that the rankings aren’t always logical. Suppose someone (you?) has the following preferences
over the three colors: Red, Blue and Orange:
Q: How do you feel about Red vs. Blue?
Q: How do you feel about Blue vs. Orange?
Q: How do you feel about Red vs. Orange?
This consumer has complete preferences (she can rank any pair of these three colors) but she does not have transitive
preferences because if she says that
then if her preferences were logical sh...
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