The objective of this paper is to provide continuous utility representation theorems analogous to Debreu’s classic utility representation theorem, albeit for preference relations that may fail to be complete and/or transitive. Specifically, we show that every (continuous and) reflexive binary relation on a (compact) metric space can be represented by means of the maxmin, or dually, minmax, of a...

We define necessary and sufficient conditions on prices and incomes under which quantity choices can violate SARP (Strong Axiom of Revealed Preference) but not WARP (Weak Axiom of Revealed Preference). As SARP extends WARP by additionally imposing transitivity on the revealed preference relation, this effectively defines the conditions under which transitivity adds bite to the empirical analysi...

This paper explorers rationalizability issues for finite sets of observations of stochastic choice in the framework introduced by Bandyopadhyay et al. (JET, 1999). Is is argued that a useful approach is to consider indirect preferences on budgets instead of direct preferences on commodity bundles. Stochastic choices are rationalizable in terms of stochastic orderings on the normalized price spa...

This paper discusses how to improve the identification of the preference of a decision maker (DM) with limited attention proposed by Masatlioglu, Nakajima, and Ozbay (2012). Their identification method relies on choice reversals so the obtained revealed preference is often very incomplete. We propose three approaches to address this problem. The first one is accommodating to a model-free approa...

We derive, by using the revealed preference method, an individual decision making model that allows for an agent not only to exhibit status quo bias, but also to make use of her default option as a reference point. The resulting model contains elements of the classical rational choice model — indeed it reduces to that model in the case of choice problems without default options — but can also b...

In addition to his role as a consumer pursuing his own interests, an individual may also regard himself as an ethical observer or citizen, judging matters from society’s point of view. However, an individual’s personal preferences do not necessarily coincide with his social preferences. This paper presents a formal model in which individuals are assumed to have two distinct preference orderings...

Stability of Time Preferences Individuals frequently face intertemporal decisions. For the purposes of economic analysis, the preference parameters assumed to govern these decisions are generally considered to be stable economic primitives. However, evidence on the stability of time preferences is notably lacking. In a large field study conducted over two years with about 1,400 individuals, tim...

The main result of this paper is a representation theorem for time preferences (on the prize-time space) that cover a variety of time preference models considered in the experimental and theoretical literature on intertemporal choice. In particular, along with many models induced by similarity relations on time and outcomes, exponential, quasi-hyperbolic, hyperbolic, subadditive, and intransiti...

We examine how price impact in the underlying asset market affects the replication of a European contingent claim. We obtain a generalized Black-Scholes pricing PDE and establish the existence and uniqueness of a classical solution to this PDE. We show that unlike the case with transaction costs, replication in the presence of price impact is always cheaper than superreplication. This model imp...

This paper studies the outcome of the amendment voting procedure based on a potentially incomplete binary relation. We assume that the decision-maker evaluates candidates in a list and iteratively updates her choice by comparing the status-quo to the next candidate. With a complete binary relation, it is known that the final selected candidate belongs to the “top cycle.” In reality however, not...