# 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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### How to force two utility functions representing the same preference to generate expected utility functions representing the same order on lotteries?

Let $i$ be an agent, and let $A=\{x,y,z\}$ be a set of three alternatives. Then, suppose that player $i$’s linear order (i.e., complete, transitive, antisymmetric and reflexive binary relation) on $A$,...
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### Varian Analysis Non satiation question

Consider preferences defined over the nonnegative orthant by (xl,x2)> (yl,y2) if X1 + X2 < y1+ y2. Do these preferences exhibit local nonsatiation? If these are the only two consumption goods ...
1 vote
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### Cobb-Douglas utility function

Why in Cobb-Douglas utility function, the exponents have to sum to one? Can they not be equal to 1 and why?
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### Convex preference and convex utility

What are the differences between convex preferences and covex utility function? Why are convexity preferences usually represented by the quasi-concave function and not the convex function?
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### Question on Isolating The Wealth Effect in Analysis of Changes in Price-Wealth Combinations - MWG Exercise 2.F.3 Parts (e) and (f)

I am doing exercises in Chapter 2 of MWG. I feel I got completely lost in exercise 2.F.3 parts (e) and (f). $\textbf{Exercise}$ Here is the question: I have solved parts (a) to (d). In particular, I ...
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### Question on The Weak Axiom of Revealed Preference and The Definition of Revealed Preference Relation

I am solving the following problem (from Exercise 2.F.3 (b) in MWG) and I got confused by the weak axiom of revealed preference and the definition of the revealed preference relation. Here is the ...
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1 vote
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### Considering there are four different goods {w,x,y,z}, how many different relations can be defined using all goods

In this problem, you can either prefer a good to another, disprefer a good to another or be indifferent between the two goods. While I have been able to do it mechanically, I am very confused as to ...
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### What does GARP in revealed preferences mean and how to regocnize it graphically?

I have a froblem understanding GARP in revealed preferences. I know what WARP means, and that SARP adds transivity such that it allows for indirect preferences, but what about GARP? How can you ...
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### How do I prove 2 indifference curves have the same properties?

I understand questions a) but I'm completely stumped at c). What do they mean by U'=1 having same properties as U=10?? And w,for questions b and c, what are they asking by "general expression for ...
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### Stock market existence and saving money

I have a generic question that perhaps has more to do with psychology than with anything else. The question is, how effective is the stock market's existence in being effective in making people save ...
1 vote
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### Proof for convex preference relation

⪰ is a strictly convex preference relation on a set X which is the set of all N-tuples of nonnegative real numbers. Further are x,y,z element of this set X and i have the preferences x ≻ y ≻ z given. ...
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### In revealed preference (RP), is any two points $x,y$ related by the indirect revealed preference relation?

Let $X$ be the closed compact convex set of alternative and $B$ be a closed compact convex subset of $X$. $C$ is defined on all closed compact convex set $B\subseteq X$. $X$ is ordered by a strictly ...
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### Why is monotonic preference and monotonic utility function non-decreasing?

Obviously a monotonic function can be either nondecreasing or nonincreasing: However, in Economics, a quick google search gives: I am interested in the history or the motivation behind the econ ...
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### What was the study that shows peoples' tax preferences shift when they get more information about their income?

I am trying to find a study I read a few years ago, but I forgot the names of the authors and the title of the study. I have already tried to search for the study on Google Scholar without much luck. ...
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### Can strict preference be represented by Utility function if not complete?

The definition states that a Utility function represents the preference relation because the relation on R satisfies transitivity and completeness. Yet, strict preferences (and indifference ...
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### Can a preference relation not satisfy monotonicity and still be represented by an Utility function?

The book I am working with (Microeconomics Theory by A. Rubinstein) states that: "In the case that preferences are represented by a utility function, preferences satisfying monotonicity (or ...
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### Can the following statement be rationalized if it yields a choice function?

A person choose an alternative to maximize another person's suffering. I thought we could define a sort of relation where the person suffers more from x than y. And if we can always do this, we can ...
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### Can the following behavior be rationalized if it yields a choice function?

The decision maker has an ideal point in mind and chooses the alternative closest to it. I am not sure if I am right, but in order to rationalize it, we first have to construct a choice function. So, ...
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### Challenging question in microeconomics - local nonsatiation

I'm studying advanced micro from the Mas-Colell book (exercise 16.C.1) I was wondering if anyone can help me to solve the following exercise. I have no idea how to deal with it Show that if a ...
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I've just encountered the following exercise from GEOFFREY A. JEHLE micro's book Strict monotonicity comes from the fact that any increase in $x_1$ or $x_2$ increases utility, and strict convexity ...