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Questions tagged [preferences]

Binary relations that reflect which states of the world an agent considers to be most desirable. Preferences are a fundamental ingredient in the axiomatic study of consumer choice decision theory.

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What is the definition of exogenous and endogenous preferences?

Wikipedia states: Exogenous Preference -- one that comes from outside the model and is unexplained by the model. Endogenous Preference -- preferences then cannot be taken as given, but are affected by individual internal responses to the external…
Stan Shunpike
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Binary Relations for Cobb-Douglas

I am reviewing old midterms to prepare for my upcoming midterm and ran across this question: Let $\alpha , \beta \in (0,1)$. Now, let $f_{\alpha}$ and $f_{\beta}$ on $\mathbb{R^2}$ be defined as $f_{\alpha}(x)=x_1^{\alpha} x_2^{1 - \alpha}$ and…
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revealed preference given an uncertain environment?

classical revealed preference is about a situation where we assume an agent has a preference over some set of possible choices $X$. We then construct a revealed preference relation on $X$ from choices made given choice sets $C\subseteq X$. But is…
user56834
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Does SARP imply WARP? and GARP imply SARP?

It’s obvious that WARP does not imply SARP, since WARP does not rule out cyclic choices, whereas SARP does. The term “Strong” axiom suggests that it encompasses the “weak” axiom. But this is not obvious to me from the definition. Does any choice…
user56834
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Are the indifference curves for bads concave?

While I was studying microeconomics, a question arose: I know what the indifference curve for one “good” good and one “bad” good looks like. But if both goods are bad, is the indifference curve concave? Because I know that concave indifference…
M. Wn
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preference relations and monotonic transformations of utillity functions

Given a choice set $X$ (NOT assumed to be a commodity set...), and utility functions $u,u'$ on $X$, it is clear that if $u'$ is a strictly monotonic transformation of $u$ then they induce the same preference relation on $X$. My question is, under…
user56834
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Asking for reference of trading strategy without inherent preference?

Han et. al.,2021 mentioned that So in contrast with traditional behavioral finance models, active strategies tend to spread through the population even if investors have no inherent preference for their characteristics. From the sentence above,…
Phil Nguyen
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Non well behaved preference

I have to discuss a consumer making a choice between 2 bundles, and the consumer has a non- well-behaved preference. What real example can I use to represent a non-well behaved preference?
carmen
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Show that if $\succsim$ is continous on $X$, then the sets $ \precsim (x^0)$ and $\succsim (x^0)$ are closed

For a set to be continuous, it's contour sets must be closed. Since we can define $$ \succsim x^0 = \{x, x^0 \in X: x \succsim x^0 \} $$ and $$ \precsim x^0 = \{x, x^0 \in X: x \precsim x^0\}$$ it can be seen that $\succsim x^0$ is the upper contour…
Pedro Cunha
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Strong monotonicity and weak monotonicity

We say $\succsim$ represents weak monotonic preferences if $$x,y \in X, \,\, y >> x \implies y \succ x $$ where $y >> x$ means that every element of $y$ is greater than every element of $x$. And we say $\succsim$ represents strong monotonic…
Pedro Cunha
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Is GARP trivially satisfied with only 1 good?

As with all revealed preference work, when the number of goods is greater than 1, then GARP (Generalised Axiom of Revealed Preference) is not always trivially satisfied. However, is it always the case that GARP is trivially satisfied when bundles…
Chris
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Completeness Axiom in Preference Relation

My textbook, Microeconomic Theory by Mas-Colell, Whinston, and Green states that given a preference relation $\succsim$ on $X$, Strict preference relation $\succ$ is defined by $ x \succ y \iff x \succsim y \text{ but not } y \succsim x…
user20961
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Problem with a Hal Varian Question from chapter 5

Remember our friend Ralph Rigid from Chapter 3? His favorite diner, Food for Thought, has adopted the following policy to reduce the crowds at lunch time: if you show up for lunch t hours before or after 12 noon, you get to deduct t dollars from…
mathuser121
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Does Concavity or quasi-concavity imply local non satiation?

I got a utility function with convex Indifferences curves and therefore convex preferences. Convexity of preferences implies Quasi-concavity. I would like to know if there is a relation between convexity of the preferences and Local non…
dewewdew
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Is this Incomplete or Indifferent?

Given X = {1,2,..., 100}. For x, y in X, define x # y if and only if x - y is a positive prime number. Is the # relation incomplete? I don't particularly understand the reasoning as of yet, and though I have a general idea after looking up the…
Ayan Bhowmick
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