Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202613 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 2019-7
Publisher: 
Brown University, Department of Economics, Providence, RI
Abstract: 
We offer a rationalization of the weak axiom of revealed preference (WARP) and of the weak generalized axiom of revealed preference (WGARP) for both finite and infinite data sets of consumer choice. We call it maximin rationalization, in which each pairwise choice is associated with a "local" utility function. We develop its associated weak revealed-preference theory. We show that preference recoverability and welfare analysis à la Varian (1982) may not be informative enough, when the weak axiom holds, but when consumers are not utility maximizers. We clarify the reasons for this failure and provide new informative bounds for the consumer's true preferences.
Subjects: 
consumer choice
revealed preference
rationalization
maximin rationalization
reference-dependent utility
law of demand
JEL: 
C60
D10
Document Type: 
Working Paper

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