北大ceer笔记2.ppt

Chapter Three Preferences Contents Describe preferences Indifference curves Well-behaved preferences Marginal rate of substitution Rationality in Economics Behavioral Postulate:A decisionmaker always chooses its most preferred alternative from its set of available alternatives. So to model choice we must model decisionmakers’ preferences. Preference Relations Comparing two different consumption bundles, x and y: strict preference: x is more preferred than is y. weak preference: x is as at least as preferred as is y. indifference: x is exactly as preferred as is y. Preference Relations Strict preference, weak preference and indifference are all preference relations. Particularly, they are ordinal relations; i.e. they state only the order in which bundles are preferred. Preference Relations denotes strict preference; x y means that bundle x is preferred strictly to bundle y. Preference Relations denotes strict preference; x y means bundle x is preferred strictly to bundle y. ~ denotes indifference; x ~ y means x and y are equally preferred. Preference Relations denotes strict preference so x y means that bundle x is preferred strictly to bundle y. ~ denotes indifference; x ~ y means x and y are equally preferred. denotes weak preference;x y means x is preferred at least as much as is y. Preference Relations x y and y x imply x ~ y. Preference Relations x y and y x imply x ~ y. x y and (not y x) imply x y. Assumptions about Preference Relations Completeness: For any two bundles x and y it is always possible to make the statement that either  x y or y x. Assumptions about Preference Relations Reflexivity: Any bundle x is always at least as preferred as itself; i.e. x x. Assumptions about Preference Relations Transitivity: Ifx is at least as preferred as y, andy is at least as preferred as z, thenx