Summarized distributions of mass: a statistical approach to consumers’ consumption spaces

This paper focuses on logical aspects of choices being made by the consumer under conditions of uncertainty or certainty. Such logical aspects are found out to be the same. Choices being made by the consumer that should maximize her subjective utility are decisions studied by revealed preference theory. A finite number of possible alternatives is considered. They are mutually exclusive propositions identifying all quantitative states of nature of a consumption plan. Each proposition of it is expressed by a real number. This research work distinguishes it from its temporary truth value depending on the state of information and knowledge of the consumer. Since each point of the consumption space of the consumer belongs to a two-dimensional convex set, this article focuses on conjoint distributions of mass. Indeed, the consumption space of the consumer is generated by all coherent summaries of a conjoint distribution of mass. Each point of her consumption space is connected with a weighted average of states of nature of two consumption plans jointly studied. They give rise to a conjoint distribution of mass. The consumer chooses a point of a two-dimensional convex set representing that bundle of goods actually demanded by her inside of her consumption space. This paper innovatively shows that it is nothing but a bilinear and disaggregate measure. It is decomposed into two real numbers, where each real number is a linear measure. In this paper, different measures are obtained. They can be disaggregate or aggregate measures, where the latter are independent of the notion of ordered pair of consumption plans.

Stability and Median Rationalizability for Aggregate Matchings

We develop the theory of stability for aggregate matchings used in empirical studies and establish fundamental properties of stable matchings including the result that the set of stable matchings is a non-empty, complete, and distributive lattice. Aggregate matchings are relevant as matching data in revealed preference theory. We present a result on rationalizing a matching data as the median stable matching.

The Consumer Problem

The theory of a rational consumer characterized by an incomplete preference order is developed using distance functions and the zero-minimum (zero-maximum) principle. The essential comparative-static properties of the associated quantity-dependent and price-dependent demand structures are characterized. Utility functions are derived from distance functions for preference structures satisfying a complete ordering assumption. The Marshall-Hicks demand theory that is based on a utility-maximizing consumer is derived as a special case of rational consumer behavior. The Hicks-Allen demand decomposition is reviewed and a conjugate profit function approach to utility maximization is developed and used to discuss Revealed Preference Theory. The Chapter closes by examining the structural consequences of the independence axiom for d(x,y;g).

New Developments in Revealed Preference Theory: Decisions Under Risk, Uncertainty, and Intertemporal Choice

This article reviews recent developments in revealed preference theory. It discusses the testable implications of theories of choice that are germane to specific economic environments. The focus is on expected utility in risky environments, subjected expected utility and maxmin expected utility in the presence of uncertainty, and exponentially discounted utility for intertemporal choice. The testable implications of these theories for data on choice from classical linear budget sets are described and shown to follow a common thread. The theories all imply an inverse relation between prices and quantities, with different qualifications depending on the functional forms in the theory under consideration.

Concrete Ontology: Comments on Lauer, Little, and Lohse

I share with all the other authors the view that conceptual metaphysics without close ties to science is of minimal value, that this holds for much of current work on social ontology, and that if there is value in social ontology, it has to be in contributing to empirical social science. I do perhaps disagree with all three authors about making any blanket statements concerning either instrumentalism or realism about the social sciences and their ontologies. I argue and try to show instead that if there are fruitful questions of social ontology, they are probably mostly local empirical issues raised by specific pieces of social science. Certain kinds of pluralism and instrumentalism may well make sense in some situations. I illustrate with debates over the need for psychological realism and revealed preference theory in economics.

In defence of revealed preference theory

This paper defends revealed preference theory against a pervasive line of criticism, according to which revealed preference methodology relies on appealing to some mental states, in particular an agent’s beliefs, rendering the project incoherent or unmotivated. I argue that all that is established by these arguments is that revealed preference theorists must accept a limited mentalism in their account of the options an agent should be modelled as choosing between. This is consistent both with an essentially behavioural interpretation of preference and with standard revealed preference methodology. And it does not undermine the core motivations of revealed preference theory.

Orbitofrontal signals for two-component choice options comply with indifference curves of Revealed Preference Theory

Economic choice options contain multiple components and constitute vectorial bundles. The question arises how they are represented by single-dimensional, scalar neuronal signals that are suitable for economic decision-making. Revealed Preference Theory provides formalisms for establishing preference relations between such bundles, including convenient graphic indifference curves. During stochastic choice between bundles with the same two juice components, we identified neuronal signals for vectorial, multi-component bundles in the orbitofrontal cortex of monkeys. A scalar signal integrated the values from all bundle components in the structured manner of the Theory; it followed the behavioral indifference curves within their confidence limits, was indistinguishable between differently composed but equally revealed preferred bundles, predicted bundle choice and complied with an optimality axiom. Further, distinct signals in other neurons coded the option components separately but followed indifference curves as a population. These data demonstrate how scalar signals represent vectorial, multi-component choice options.