Chernoff's dual axiom,revealed preference and weak rational choice functions

A new and a weaker concept of rationalizability is introduced and its implications on the properties of individual choice are investigated. Especially, (i) it is shown that a property of choice functions, called Chernoff's dual axiom in this paper, plays a crucial role for the rationality of choice, and (ii) weakening the concept of rationalizability facilitates characterization of revealed preference relations.     

The challenge of akrasia for the theory of rational choice

The phenomenon of akrasia, in which an actor makes a choice she regrets even while choosing it, appears problematic for theories of rational choice, which assume that an agent prefers any chosen course of action. The apparent possibility of akratic action presents a challenge to rational choice theorists, either to demonstrate that it is illusory or to show that akratic action does not violate the axioms of rational choice. The problematic status of akrasia is exhibited most sharply when set against the backdrop of praxeology. Therefore, this paper will explore whether the idea of akratic action can be reconciled with the fundamental principles of praxeology.

Continuous choice functions and the strong axiom of revealed preference

Summary In this note, it is shown that a result due to Uzawa showing that the weak axiom of revealed preference together with a regularity condition implies the strong axiom of revealed preference can be derived from the regularity conditionalone, if the choice function is continuous in prices and in income. The observation that the weak axiom of revealed preference is not needed suggests that this regularity condition is remarkably strong. The main result of the paper is quite general in the sense that the only additional assumption on the choice function is that the whole budget be spent.I thank Charles Blackorby for his comments on an earlier version.     

Expected utility theory without the completeness axiom

We study the problem of obtaining an expected utility representation for a potentially incomplete preference relation over lotteries by means of a set of von Neumann-Morgenstern utility functions. It is shown that, when the prize space is a compact metric space, a preference relation admits such a multi-utility representation provided that it satisfies the standard axioms of expected utility theory. Moreover, the representing set of utilities is unique in a well-defined sense.     

Yaari''s dual theory without the completeness axiom

Summary. This note shows how Yaari (1987)'s dual theory of choice under risk naturally extends to the case of incomplete preferences. This also provides an axiomatic characterization of a large and widely studied class of stochastic orders used to rank the riskiness of random variables or the dispersion of income distributions (including, e.g., second order stochastic dominance, dispersion, location independent riskiness, see Chateauneuf, Cohen, and Meilijson, 1997).Received: 21 January 2003, Revised: 23 April 2003, JEL Classification Numbers: D81.I wish to thank Erio Castagnoli, Alain Chateauneuf, Paolo Ghirardato, Massimo Marinacci, Efe Ok, Peter Wakker, as well as an associate editor and an anonymous referee for helpful suggestions. The financial support of CNR, MIUR, and Universitá Bocconi is gratefully acknowledged. Part of this research has been done at the Department of Economics of Boston University.     

‘Regular’ choice and the weak axiom of stochastic revealed preference

We explore the relation between two ‘rationality conditions’ for stochastic choice behavior: regularity and the weak axiom of stochastic revealed preference (WASRP). We show that WASRP implies regularity, but the converse is not true. We identify a restriction on the domain of the stochastic choice function, which suffices for regularity to imply WASRP. When the universal set of alternatives is finite, this restriction is also necessary for regularity to imply WASRP. Furthermore, we identify necessary and sufficient domain restrictions for regularity to imply WASRP, when the universal set of alternatives is finite and stochastic choice functions are all degenerate. Results in the traditional, deterministic, framework regarding the relation between Chernoff’s condition and the weak axiom of revealed preference follow as special cases. Thus, general conditions are established, under which regularity can substitute for WASRP as the axiomatic foundation for a theory of choice behavior.     

Between mathematical formalism,normative choice rules,and the behavioural sciences: The emergence of rational choice theories in the late 1940s and early 1950s

Abstract

This paper discusses why mathematical economists of the early Cold War period favored formal-axiomatic over behavioral choice theories. One reason was that formal-axiomatic theories allowed mathematical economists to improve the conceptual and theoretical foundations of economics and thereby to increase its scientific status. Furthermore, the separation between mathematical economics and other behavioral sciences was not as clear-cut as often argued. While economists did not modify their behavioral assumptions, some acknowledged the empirical shortcomings of their models. The paper reveals the multifaceted nature of rational choice theories reflected in the changing interpretations and roles of the theories in those early years.     

Nature's technology

We are faced with a deteriorating land system across the vast low-rainfall areas of the world. This is creating serious social and environmental disruption. The Sahelian zone is a case in point. The loss of both indigenous animals and now the land resource itself is little short of catastrophic.There is, however, a system in these parts of the world that has evolved and stabilized over the millennia. This is the natural system of grassland and “wild” animals living in harmony and forming a healthy and rich ecosystem. Man has substituted domestic animals for this indigenous fauna and is now facing the disruption of the entire system as a result.This paper looks at our “modern” ranching systems and compares them with the natural entity. The implementation of the new land use is now underway, using locally adapted grazing animals within their environment. Insights that have come from this work have led to the development of a new philosophy and thinking about our land-use systems in general.In a world faced with the horrifying specter of food shortages, loss of land resources, and energy crises, “nature's technology” points the way to a new future. If we react fast enough to save our planet and ourselves, the natural systems will be reinstated and become the land use of the future, particularly through the drier lands of the world, which today are in such peril.     

The impossibility of rational consumer choice

In this paper we show that a rational consumer choice along the lines traditionally suggested might lead to paradoxical results if one considers multidimensional goods, which incorporate a series of incommensurable aspects. Thereby, we explore the similarity between the resulting paradox and Kenneth Arrow’s well known Impossibility Theorem. Based on these considerations we suggest a solution for the former problem along the lines of Herbert Simon and Amos Tversky, which might—if driven to its extreme—even provide a unique and arguably rational solution for consumer choice among multidimensional goods. Eventually, we argue that the resulting framework poses a potentially useful starting point for further developing an evolutionary theory of consumer choice.     

James Buchanan’s public debt theory: a rational reconstruction

James Buchanan’s Public Principles of Public Debt is universally associated with the claim that debt allows the cost of public activity to be shifted onto future generations. This claim treats a generation as a unitary and acting entity. Such treatment is standard fare for those macro theorists who work with representative agents and societal averages in place of the actual individuals who constitute a society. This treatment, however, conflicts with the central tenor of Buchanan’s scholarly oeuvre. This essay undertakes a rational reconstruction to render reasonable his claim about debt shifting, while also rendering it consistent with his oft-repeated claim that cost can be experienced only by individuals and never by such aggregates as generations. This reconstruction reveals a cleavage between approaching public debt through macro theory and approaching it through public finance.     

共创价值对顾客忠诚和员工工作绩效的影响

利用对420名消费者的问卷调查数据,运用结构方程模型实证分析了共创价值是如何影响顾客满意和员工工作满意度、进而如何作用于顾客忠诚和员工工作绩效水平的。结果表明:共创价值与顾客满意显著相关,并对顾客满意具有促进作用;顾客满意对顾客忠诚具有促进作用;共创价值与员工工作满意度显著相关,并对员工工作满意度具有促进作用;员工工作满意度对其工作绩效具有促进作用;顾客满意与员工工作绩效显著相关,并对员工工作绩效具有促进作用;员工工作满意度与顾客忠诚显著相关,并对顾客忠诚具有促进作用。     

Chaucer's Craft in Telling Philosophical Lessons in "The Manciple's Tale"

"The Manciple's Tale" is a beast fable. Chaucer is a genius both in designing creative plots and teaching philosophical lessons in this beast fable. Chaucer arranges the Manciple to tell the story and the Manciple lets the animals tell the truth. Chaucer combines two philosophical lessons and his creative plot together perfectly.     

Energy in America's future

Energy in America's Future, the book reported on in this article, assembled facts and performed analyses required for making informed energy choices. It reached broad conclusions on supply and demand prospects and on the environmental and other social aspects of policy choices. Although near-term constraints are severely binding, the nation's natural resource position is favorable for long-run supply expansion. Future technologies are also promising in cost terms. Although costs are bound to rise, a ceiling on long-run supply costs looks to be possible at real levels surprisingly close to current prices. Energy consumption in relationship to overall national output (GNP) will be growing at a slower rate than in recent decades. Consumers will use relatively less energy as a result of higher energy prices, conservation incentives, and new energy-using technology. Even so, overall energy use will grow. Major energy demand policy issues concern not just the likely rate of growth of consumption, but also the possible problems connected with optimizing energy efficiency at the expense of economic efficiency (i.e., output in relation to all inputs, particularly those of labor and capital). Environmental impacts and concerns about questions of human health and safety will continue to affect public acceptance of particular energy technologies. The public will need to be adequately informed on the comparative risks of energy supply technologies, and the technical and institutional means available for reducing these risks. The price system must be permitted to function to the maximum feasible extent. In addition, the task for political leadership is to forge a public consensus in support of achievable energy goals. This has been difficult because of conflicting public perceptions of the facts and clashes in social values among different groups. The future prospects for achieving a national energy consensus should be enhanced by the outlook for slower energy demand growth and favorable supply prospects along with potential improvements in the environmental side effects associated with new and improved supply technologies. As knowledge of these changing circumstances becomes more broadly disseminated, the ability to achieve broad public support of energy goals should grow stronger.     

A policy rule for ‘Say's Law’ in a theory of temporary equilibrium

In a theory of temporary macroeconomic equilibrium this paper considers whether there is a simple nondiscretionary rule of monetary management under which the free play of market forces will always equate aggregate money demand to the sum of expected money incomes, whatever the latter may be, so that aggregate demand ceases to be a determinant of the economy's behavior. The rule proposed is that the Central Bank should let the commercial banks determine their cash reserves by trading negotiable securities with it at current prices. The conditions for the rule's success are given and are supported by theoretical considerations.     

技术溢出、企业研发路径与政府政策引导

针对技术溢出程度的不确定,建立了三阶段研发博弈模型,研究了企业最优研发路径的选择问题。在此基础上,分析了企业利润最大化与社会福利最大化的目标一致性以及政府的财税政策在纠正两目标差距上的有效性。结果表明:当技术溢出较小时,企业选择的最优研发路径能使两者目标一致;当技术溢出较大时,企业的最优研发路径会使两者目标不一致,此时政府需要对企业进行引导以促进协同创新,其中差异化补贴政策能有效纠正目标差距,政府减免企业所得税能有效缩小目标差距。     

Heterogeneous inflationary expectations,Fisher's theory of interest and the allocative efficiency of the bond market

This letter considers the consequences of heterogeneous inflationary expectations for Fisher's theory of interest. It is further shown that divergent and erroneous expectations cause welfare losses which increase when either the variance of expectations or of actualinflation increase.     

Incomplete preferences and rational intransitivity of choice

Do violations of classical rationality theory imply that agents are acting against their self-interest? To answer this question, we investigate whether completeness and transitivity necessarily hold when agents choose outcome rationally—that is, their choice sequences do not lead to dominated outcomes. We show that, because of the danger of money pumps and other manipulations, outcome rationality implies that agents must have transitive psychological preferences. Revealed preferences, on the other hand, must be complete since agents can be forced to choose from any set of options. But these justifications of transitivity and completeness cannot be combined. We show that if psychological preferences are incomplete then revealed preferences can be intransitive without exposing agents to manipulations or violating outcome rationality. We also show that a specific case of nonstandard behavior, status quo maintenance, is outcome-rational in the simple environments considered in the experimental literature, but not in more complex settings.