General Revealed Preferences

Abstract

Following Richter (1966), we provide criteria under which a preference relation implied by a finite set of choice observations has a complete extension that can in turn be represented by a utility function. These criteria rely on a mapping over preference relations, the rational closure, which is a generalization of the transitive closure and is employed to construct the complete extension. We illustrate this approach by re- visiting the problem of rationalizing incomplete preferences revealed by a sequence of consumption decisions under different budget sets. Our result relaxes the usual assumptions about the consumption space and the structure of budgets generating the observed choices, and allows for a new interpretation of classical revealed preference axioms.Length: 20

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