高级微观经济学 Part 2_Consumption Theory I.pptVIP

lecture5 for Chu Kechen Honors College Advanced Microeconomics(Consumption Theory I) Preference and Choice Content: Preference and rationality The rule of choice Budget Demand function WA and demanded law 1.Preference An (acceptable) alternatives set (or a consumption set ) A (weak) preference relation“ ”: a binary relationship on X, for any , means” x is at least as good as y”. A strict preference “ ”: An indifference relation “ ”: Definition: preference on X is rational if: It’s complete: It’s reflexive: It’s transitive: Propersition1: if is rational, then: is irreflexive and transitive is reflexive and transitive and symmetric If 2.The rule of choice We can only observe what a man choice under a certain constrain. Is the man’s preference rational when we observed several choice of him? Or if his preference was rational, what rules will his choice take? Choice construct: a choice under certain budget: Budget set: and , is a budget family, represented a limited list of all possible choice under certain system, nature, technology and other social environments that the decision-maker must take. Choice rule: , maybe contain more than one elements. Weak Axiom of Revealed Preference (WARP or WA) : if for certain , and for and , then must Revealed Preference “ ”: Choice set Proposition2: if are rational, then choice construct satisfied WA. Prop.2 indicate that if the decision-maker have rational preference, than his choice satisfied WA. Is his preference rational if his choice is observed satisfy WA? Definition: for , we say “rational preference rationalization Propersition3: if satisfied WA and contain all subsets of X that is ternary and less than t