We consider a market model in which all commodities are inherently indivisible and thus are traded in integer quantities. We ask whether a finite set of price-quantity observations satisfying the Generalized Axiom of Revealed Preference (GARP) is consistent with utility maximization. Although familiar conditions such as non-satiation become meaningless in the current discrete model, by refining...

This paper addresses the following two key criticisms of the empirical application of revealed preference theory: When it does not reject, it doesn’t provide precise predictions; and when it does reject, it doesn’t help us characterise the nature of irrationality or the degree/direction of changing tastes. Recent developments in the application of RP theory are shown to have rendered these crit...

Firms account for a substantial share of earnings inequality. Although the standard explanation for why is that search frictions support an equilibrium with rents, this paper finds that compensating differentials are at least as important. To reach this finding, this paper develops a structural search model and estimates it on U.S. administrative data with 1.5 million firms and 100 million work...

With complete information, choice of one option over another conveys preference. Yet when search is incomplete, this is not necessarily the case. It may instead reflect unawareness that a superior alternative was available. To separate these phenomena, we consider nonstandard data on the evolution of provisional choices with contemplation time. We characterize precisely when the resulting data ...

This note contains a short history of my work on the foundations of revealed preference, emphasizing the intellectual influence of Sydney Afriat. I also present a few “novel” applications of revealed preference analysis drawn from some areas of applied economics.

Choice may be determined both by a consideration of one’s welfare (normative preference) and by desires (temptation preference). To provide foundations for such a theory, Gul and Pesendorfer [10, 11] adopt a preference over choice problems as a primitive and hypothesize that temptation creates a preference for commitment. This paper argues that temptation may in fact create the absence of a pre...

A much discussed topic in the theory of choice is how a preference order among options can be derived from the assumption that the notion of ‘choice’ is primitive. Assuming a choice function that selects elements from each finite set of options, Arrow (1959) already showed how we can generate a weak ordering by putting constraints on the behavior of such a function such that it behaves as a uti...

It is shown that preferences can be constructed from observed choice behavior in a way that is robust to indifferent selection (i.e., the agent is indifferent between two alternatives but, nevertheless, is only observed selecting one of them). More precisely, a suggestion by Savage (1954) to reveal indifferent selection by considering small monetary perturbations of alternatives is formalized a...

In this paper, we consider the revealed preferences problem from a learning perspective. Every day, a price vector and a budget is drawn from an unknown distribution, and a rational agent buys his most preferred bundle according to some unknown utility function, subject to the given prices and budget constraint. We wish not only to find a utility function which rationalizes a finite set of obse...

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...