# 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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### For the case of two goods, give an example of preferences that are represnted by a continuous utility function that allows for fat indifference curves

The question in the title sounds like a trick question, due to the monotonicity property that indifference curves have, such that for two goods x and y, strong monotonicity implies y > x. Possible ...
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### Reference request: modeling firms that act to create demand for their products

(I don't have an economics background; apologies if my terminology is confusing.) It seems like there is often a situation where a firm can take actions to create demand that did not already exist. ...
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### Why are indifference curves (often) of infinite length?

Indifference curves are often of infinite length. Is this implied by monotonicity or non-satiation? If not, what is/are some condition(s) that are sufficient for indifference curves to have infinite ...
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### Are revealed preferences normative or positive notion?

I always thought from my understanding of the terms normative and positive that revealed preferences are a positive concept. For example, saying Anakin prefers grass to sand (i.e. $U(g)\succ U(s)$) is ...
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### Can we have a Non-Reflexive Preference Relation?

I've been thinking about preferences alot recently and have been specifically thinking about the reflexivity requirement. That is: $$x \succsim x$$ Though this is apparent and obvious, I have been ...
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### Preference: Convexity and Monotonicity

I need an example of a Convex, non-monotonic preference Non-convex, monotonic preference I figured that an example of non-convex, monotonic utility preference could be $U(x,y)=x^2+y^2$. For convex, ...
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### The mathematical proof of a monotonic utility transformation does not restrict the use of strictly decreasing monotonic functions. Why bar them?

I understand from an intuitive sense that decreasing monotonic transformations will skew the choices and ordinality. But mathematically the $F'(U(x,y))$ just cancels out each other out in numerator ...
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### Everyone has the same marginal rate of substitution

I'm currently reading Varian's Intermediate Microeconomics and what struck me, is this statement on page 89 of the 8th edition. If everyone faces the same prices for the two goods, then everyone ...
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### Substitution effect when price of both goods change by the same percentage

I am trying to grasp the concept of income- and substitution effects. The way, I've understood it, the decomposition bundle is found, at the original indifference curve, where the slope equals that ...
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### How are preferences related to relative prices?

For instance, across regions of a country or between countries. Is that different preferences for food lead to distinct relative prices in different regions or countries? Or is it the other way ...
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### GARP and SARP assumed mononticity?

Monotonicity means the decision maker prefer more goods than less. It is not mentioned in textbook that SARP and GARP preasumed monotonicity. GARP: if $a$ is indirectly revealed preferred to $b$, ...
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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 ...
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### Proof of monotonocity of preferences

Question from Intermediate Microeconomics by Hal Varian: "We claimed in the text that if preferences were monotonic, then a diagonal line through the origin would intersect each indifference curve ...
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### An example of preferences over a countable set that cannot be represented by a utility function

Give an example of preferences over a countable set in which the preferences cannot be represented by a utility function that returns only integers as values. I know a utility function exist that ...
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### Preference relations defined by $x_1^n + x_2^n$ converge to $\max\{x_1, x_2\}$

In the problem set 2 of Rubinsteins Microeconomics (btw is there a comparably nice written book on macroeconomics?) there is the following question: Let $\succ_n$ be the preference relations defined ...
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### Finding Optimal Bundle and Change in Satisfaction after Changes in Budget Constraint

I am looking at the following exercise and struggling with the solution proposed by my microeconomics book. A consumer spends all his income on two goods, X and Y. The prices he paid and the ...
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### Proof of Choice Coherence in Kreps (2013)

In the first chapter of Kreps (2013), there is a proof that the choice function satisfies choice coherence. Kreps writes: I do not understand how the third sentence of (b) logically follows from the ...
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### Question about Locally non-satiated preferences

If a consumer has locally non-satiated preferences, which of these 2 bundles is preferred and why? Bundle A: (1,3) Bundle B: (4,2) This is what I've reasoned from my very limited understanding of ...
I have this question for microecon that asks do the following utility functions represent the same preferences: $u(x_1, x_2) = x1 \cdot x2, \; v(x_1, x_2) = \ln x_1 + \ln x_2$ \$u(x_1, x_2) = x1 \cdot ...