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Preference symmetries,partial differential equations,and functional forms for utility
Authors:Christopher J. Tyson
Affiliation:School of Economics and Finance, Queen Mary University of London, Mile End Road, London E1 4NS, UK
Abstract:
A discrete symmetry of a preference relation is a mapping from the domain of choice to itself under which preference comparisons are invariant; a continuous symmetry is a one-parameter family of such transformations that includes the identity; and a symmetry field is a vector field whose trajectories generate a continuous symmetry. Any continuous symmetry of a preference relation implies that its representations satisfy a system of PDEs. Conversely the system implies the continuous symmetry if the latter is generated by a field. Moreover, solving the PDEs yields the functional form for utility equivalent to the symmetry. This framework is shown to encompass a variety of representation theorems related to univariate separability, multivariate separability, and homogeneity, including the cases of Cobb–Douglas and CES utility.
Keywords:Continuous symmetry   Separability   Smooth preferences   Utility representation
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