Revealed smooth nontransitive preferences

Research output: Contribution to journalJournal articlepeer-review

In the present paper, we are concerned with the behavioural consequences of consumers having nontransitive preference relations. Data sets consist of finitely many observations of price vectors and consumption bundles. A preference relation rationalizes a data set provided that for every observed consumption bundle, all strictly preferred bundles are more expensive than the observed bundle. Our main result is that data sets can be rationalized by a smooth nontransitive preference relation if and only if prices can normalized such that the law of demand is satisfied. Market data sets consist of finitely many observations of price vectors, lists of individual
incomes and aggregate demands. We apply our main result to characterize market data sets consistent with equilibrium behaviour of pure-exchange economies with smooth nontransitive consumers.
Original languageEnglish
JournalEconomic Theory
Volume54
Issue number3
Pages (from-to)463-484
ISSN0938-2259
DOIs
Publication statusPublished - 2013

Bibliographical note

JEL Classification D1; D5

ID: 82305879