The Weak Axiom of Revealed Preference (WARP)(显示性偏好弱公理) Choice data which violate the Warp are inconsistent with economic rationality The Warp is a necessary condition for applying economic rationality to explain observed choices 北京大学经济学院 Slide16
北京大学经济学院 Slide16 The Weak Axiom of Revealed Preference (WARP)（显示性偏好弱公理） • Choice data which violate the WARP are inconsistent with economic rationality. • The WARP is a necessary condition for applying economic rationality to explain observed choices
The Weak Axiom of revealed Preference (WARp) 2 x is chosen when y is available, so x>y. y is chosen when x is available, so y>X D These statements are inconsistent with each other X 北京大学经济学院 Slidell
北京大学经济学院 Slide17 The Weak Axiom of Revealed Preference (WARP) x2 x y These statements are inconsistent with each other. x is chosen when y is available, so x y. y is chosen when x is available, so y x. D p D p x1
The strong Axiom of Revealed Preference (SARP)(显示性偏好强公理) If the bundle x is revealed( directly or indirectly)as preferred to the bundle y and x*y, then it is never the case that the y is revealed (directly or indirectly)as preferred to x e x>yor x y not (y>x or y X) 京大学经济学院 Slide18
北京大学经济学院 Slide18 The Strong Axiom of Revealed Preference (SARP)（显示性偏好强公理） • If the bundle x is revealed (directly or indirectly) as preferred to the bundle y and x ≠ y, then it is never the case that the y is revealed (directly or indirectly) as preferred to x; i.e. x y or x y not ( y x or y x ). D p D p I p I p
The strong axiom of revealed Preference That the observed choice data satisfy the sarp is a condition necessary and sufficient for there to be a well-behaved preference relation that "rationalizes"the data 北京大学经济学院 Slide19
北京大学经济学院 Slide19 The Strong Axiom of Revealed Preference • That the observed choice data satisfy the SARP is a condition necessary and sufficient for there to be a well-behaved preference relation that “rationalizes” the data
From Revealed Preference to Indifference Curves Suppose we have the choice data satisfy the saRp Then we can discover approximately where are the consumer's indifference curves How? 北京大学经济学院 slide20
北京大学经济学院 Slide20 From Revealed Preference to Indifference Curves • Suppose we have the choice data satisfy the SARP. • Then we can discover approximately where are the consumer’s indifference curves. • How?