Remarks concerning concave utility functions on finite sets

Summary. A direct construction of concave utility functions representing convex preferences on finite sets is presented. An alternative construction in which at first directions of supergradients (prices) are found, and then utility levels and lengths of those supergradients are computed, is exhibited as well. The concept of a least concave utility function is problematic in this context.Received: 28 November 2002, Revised: 28 June 2004, JEL Classification Numbers: D11, C60.I am indebted to an anonymous referee, Marcel K. Richter and Kam-Chau Wong, for many valuable remarks and suggestions.     

The road to rationalisation: A history of “Where the Empirical Lives” (or has lived) in consumer choice theory

This paper examines the different ways that economists have characterised the empirical content of modern consumer choice theory. There has been general agreement among economists that each stage in the development of the theory has been associated with an improvement in the theory's empirical content, and yet there has been no agreement about what exactly the empirical content of consumer choice theory is at any stage in the process. I call this the problem of observational ambiguity. The paper historically documents this problem, links it to various theoretical developments, and relates it to debates in contemporary economic theory.     

General equilibrium with differentiated commodities: the linear activity model without joint production

Summary In this paper the existence of a general equilibrium with differentiated commodities is proved for the classical case of a production set with constant returns, spanned by elementary activities without joint production, and with a finite set of primary factors. This framework allows to proceed without strong assumptions concerning substitution possibilities, which are typical in general equilibrium theory with differentiated commodities, but which at least with respect to production are not adequate to the problem. Moreover, in our model general consumption sets are allowed. Thus true intermediate products are not excluded. Furthermore the possibility of survival without trade is not assumed.I am indebted to E. Dierker, M. Hellwig, K.J. Koch, A. Mas-Colell, M. Nermuth, W. Neudeck, and to an anonymous referee for comments and suggestions. Of course, I am responsible for any shortcomings. Finally, support by the Deutsche Forschungsgemeinschaft through SFB 303 is gratefully acknowledged.     

Sen’s criticism of revealed preference theory and its ‘neo-samuelsonian critique’: a methodological and theoretical assessment

This paper evaluates how Amartya Sen’s critique of revealed preference theory (RPT) stands against the latter’s contemporary, ‘neo-Samuelsonian’ version. Neo- Samuelsonians have argued that Sen’s arguments against RPT are innocuous, in particular once it is acknowledged that RPT does not assume away the existence of motivations or other latent psychological or cognitive processes. Sen’s claims that preferences and choices need to be distinguished and that external factors need to be taken into account to analyze the act of choice then appear to be irrelevant. However, while it is true that contemporary revealed preference theory (CRPT) partially evades Sen’s critique, I show that the latter is still relevant outside the restricted areas of consumer choice and market dynamics. In particular, Sen’s views regarding the importance of incomplete preferences and the multiplicity of levels of agency can hardly be integrated into the framework of CRPT. This is a significant limit, given the imperialistic claims of some of the proponents of the latter.     

Utility Representation of an Incomplete Preference Relation

We consider the problem of representing a (possibly) incomplete preference relation by means of a vector-valued utility function. Continuous and semicontinuous representation results are reported in the case of preference relations that are, in a sense, not “too incomplete.” These results generalize some of the classical utility representation theorems of the theory of individual choice and paves the way towards developing a consumer theory that realistically allows individuals to exhibit some “indecisiveness” on occasion. Journal of Economic Literature Classification Number: D11.     

Revealed preference and differentiable demand

Summary. We prove that, for finitely many demand observations, the Strong Axiom of Revealed Preference tests not only the existence of a strictly concave, strictly monotone and continuous utility generator, but also one that generates an infinitely differentiable demand function. Our results extend those of previous related results (Matzkin and Richter, 1991; Chiappori and Rochet, 1987), yielding differentiable demand functions but without requiring differentiable utility functions.Received: 1 November 2001, Revised: 5 February 2004, JEL Classification Numbers: D11, D12. Correspondence to: Kam-Chau WongThis is a much revised version of Lee and Wong (2001). We are grateful to the Referee for valuable suggestions. We also thank Professor Marcel K. Richter for his comments.     

A general revealed preference theorem for stochastic demand behavior

Summary. We present a general revealed preference theorem concerning stochastic choice behavior by consumers. We show that, when the consumer spends her entire wealth, the Weak Axiom of Stochastic Revealed Preference due to Bandyopadhyay, Dasgupta, and Pattanaik (1999) is equivalent to a restriction on stochastic demand behavior that we call stochastic substitutability. We also show that the relationship between the Weak Axiom of Revealed Preference and Samuelson's inequality in the deterministic theory, and the main result of Bandyopadhyay, Dasgupta, and Pattanaik (1999) are both special cases of our result.Received: 10 September 2001, Revised: 4 April 2003, JEL Classification Numbers: D11. Correspondence to: Prasanta K. PattanaikOur greatest debt is to the referee of this paper, who made numerous helpful suggestions. We thank Robin Cubitt, Kunal Sengupta and seminar audiences at Jawaharlal Nehru University, Indian Statistical Institute, University of East Anglia, Universidad Carlos III, University of Essex and University of Montreal for their helpful comments. Prasanta K. Pattanaik acknowledges his intellectual debt to Salvador Barbera, Tapas Majumdar and Amartya Sen.     

Multidimensional inequality with variable population size

Summary. We study inequality in a context of more than one variable by extending a celebrated result of Hardy, Littlewood and Pölya (1934) to the case of distributions with variable population sizes, whose individuals differ in many characteristics besides income. A new ordering between rectangular matrices, representing such distributions, is provided and characterized by convexity theory.Received: 19 October 2003, Revised: 7 September 2004, JEL Classification Numbers: D31, D63, I31.I am indebted to C. d’Aspremont, V. Dardanoni, G. Koshevoy, K. Mosler and especially J. Weymark and an anonymous referee for many useful comments.     

An efficiency characterization of plurality rule in collective choice problems

We consider the problem of selecting alternatives from a set of feasible alternatives over which each agent is endowed with a strict preference. We show that there is one and only one rule that satisfies anonymity, neutrality, efficiency, tops-only, and reinforcement. The rule is known as plurality rule, which selects the alternative(s) most preferred by the largest number of agents. I would like to thank William Thomson for helpful suggestions and discussions. I am grateful to Biung-Ghi Ju, Hyungjun Kim, and Yan-An Hwang for detailed comments. I am also indebted to the Editor and an anonymous referee for valuable suggestions. As usual, I am responsible for any remaining deficiency.     

A model of the innovation-adaptation mechanism driving economic dynamics: a micro representation

The model that this paper sets out is based on a combination of the Schumpeterian creative destruction and the neo-Austrian notion of market process. It gives a formalization of the succession innovation-structural organization and its endogenous mechanism, crucial to explain economic growth and development. More in particular, the essay gives an explanation of innovation, endogenous uncertainty and describes the way equilibrating and disequilibrating processes are intertwined and operate. It also shows that a representation of this dynamic competition process cannot do without some appropriate development on entrepreneurship and its links with uncertainty. Finally, some simulations with the proposed model are providedJEL Classification: M13, O31, D80, E32, O12I am indebted to C. R. Wymer for his advice and for the computer programs that have permitted the simulation of the model in this paper, including choice and substitutions of variables and specification of inequality conditions. These programs form part of the WYSEA (System Estimation and Analysis) package.     

What kind of preference maximization does the weak axiom of revealed preference characterize?

A (multivalued) choice is justified if no two chosen alternatives are preferred to each other, and if all chosen alternatives are preferred to all rejected alternatives. This concept permits a connection between the behavioral property expressed by WARP and a weak form of preference maximization. I am grateful to Michele Lombardi, Michael Mandler, Paola Manzini and an anonymous referee for useful discussions and comments.     

选择实验理论及其在食品需求研究中的应用:文献综述

概述了选择实验理论及其应用,在此基础上对利用选择实验方法研究食品需求的国内外文献进行综述。得出结论:美国的此类研究主要聚焦于消费者对食品质量和安全属性的偏好和支付意愿方面;欧洲的此类研究除了关注消费者的食品质量和安全需求外,还关注转基因、动物福利等问题。提出后续基于此类方法的研究应进一步关注食品特定属性的变化对消费者或社会福利的影响以及由此导致的市场效应的评价,而消费者需求行为与食品生产者行为、政府角色的结合可作为未来研究的切入点,同时应将选择实验方法更多地应用于中国食品需求研究。     

Costly switching and investment volatility

Summary. This paper extends the literature on the optimal switching rule between two investments by considering the case where switching between investments is costly. The model builds on the classic framework of the multi-armed Bandit problem by explicitly incorporating two key assumptions. First, switching investments is costly. Second, only the investment operated by the investor evolves as a random walk. The objective of the investor is to maximize the discounted sum of expected net profits over the infinite horizon. The main result is that when the volatility of profits from investments increases, so does the minimum profit gain needed for an investor to switch investments.JEL Classification Numbers: C44, C61.I am indebted to Prajit K. Dutta for his guidance throughout this research. I am grateful for Presidents Summer 2000 Research Fellowship of Columbia University. I appreciate the comments from the anonymous referee. I also thank Lalith Munasinghe and Rajiv Sethi. I also thank Dr. Jong Myeon Kim for editing this version of the paper.     

Rational inattention and revealed preference: The data-theoretic approach to economic modeling

Beliefs have as pervasive a role as utility functions in economic models of choice, and are no more visible to the naked eye. This suggests the value of a data-theoretic approach to imperfect information along the lines of Samuelson's “revealed preference” approach to utility maximization. I introduce a recently developed approach of this nature (Caplin and Martin, 2013a, Caplin and Dean, 2013a, Caplin and Dean, 2013b). I highlight the broader potential of the data-theoretic approach to answer questions of an inter-disciplinary nature and to discipline an oncoming flood of behaviorally-relevant data.     

跨国直接投资区位的行为经济学分析

跨国直接投资的区位研究一直是理论界的一个热点,但目前的研究都是在新古典经济学的框架之下进行的。本文运用行为经济学的基本理论对跨国直接投资区位理论进行研究,认为经济结构、文化、空间偏好等也是影响跨国企业对外直接投资区位选择的因素。     

从单点到并行:聚焦战略的分化趋势与实现路径

随着经济技术社会的进步和企业间竞争的加剧,消费者内在的求异偏好得到持续强化,市场需求因之不断分化,而现有的专注于单个细分市场的聚焦战略理论无法应对。本文从案例事实的观察入手,提出了并行聚焦战略的概念,论证了聚焦战略从单点聚焦向并行聚焦发展的动因,探讨了并行聚焦战略"并行不悖、和而不同"的理想境界及其达成途径。     

Revealed group preferences on non-convex choice problems

Summary. This paper studies the conditions under which the basic results of the revealed preference theory can be established on the domain of choice problems which include non-convex feasible sets; the exercise is closely related to the works of Peters and Wakker (1991) and Bossert (1994). We show that while no continuous choice function can satisfy strong Pareto optimality over the class of all compact and comprehensive choice problems, strong Pareto optimality, Arrow's choice axiom, upper hemicontinuity and a weak compromisation postulate turn out to be necessary and sufficient to represent choice correspondences by continuous, strictly increasing and quasiconcave real-valued functions. Some applications of our main findings to axiomatic bargaining theory are also studied. Received: December 2, 1996; revised version: February 27, 1998     

Choices, situations, and happiness

This article explores some conceptual issues in the study of well-being using the traditional economic approach of inferring preferences solely from choice behavior. We argue that choice behavior alone can never reveal which situations make people better off, even with unlimited data and under the maintained hypothesis of 100% rational choice. Ancillary assumptions or additional forms of data such as happiness measures are always needed. With such ancillary assumptions and additional data, however, the use of revealed preference to study well-being can be significantly improved, so that the choices people make can jointly identify preferences, mistakes, and well-being.     

Choice, preference and rationalizability in pareto’s theory of economic behavior

Pareto initiated the shift of economic theory from utility/preference to choice in order to fill a gap between theoretical and empirical economics. His suggestions for an empirically-oriented theory of choice were to be developed decades later in the literature on revealed preference and on the conditions of equivalence between preference-based and choice-based axiomatic structures. In the process, however, substantial departures from Pareto’s implicit design of the situation of choice were introduced. In this paper, the conditions for the rationalizability of choice are re-defined so that they fit the type of situation that Pareto had in mind. The result is that the main consistency axioms of standard choice theory have to give way to a different combination of axioms that concern decisiveness as well as consistency. (JEL:B13, D01, D11).     

经济政策选择的交易成本分析方法

经济发展在一定意义上是一系列经济政策选择的过程.在数学上,经济政策的选择与微观经济学消费者选择可以具有同样形式.然而,从内容上看,经济政策的选择无法直接应用消费者行为理论进行分析,因为前者没有市场价格.为了解决这个问题,需要引进交易成本的概念,经济政策的交易成本相当于市场价格.这样,一种经济政策选择的理性模式就可以建立起来.