LECTURES IN THE MICROECONOMICS OF CHOICE

People pursue their own interests, whatever those interests might be. Some people have interests that are narrow and selfish, while others have interests that are broad and altruistic. The idea that people are self-interested underpins all of economic analysis and raises two fundamental questions: 1. How do people choose the actions they think will further their own interests? 2. Can the potentially conflicting interests of different people be made to 'mesh' in some sort of socio-economic equilibrium? This book is devoted to a detailed study of the first question. Its Companion Volume (Economy-Wide Microeconomics: Equilibrium, Optimality, Applications and Tests) makes a detailed study of the second question.

Following some foundational remarks, this book studies the Arrow–Debreu theory of consumer choice. That theory supposes people choose so as to maximize a complete, continuous, transitive, and reflexive binary preference relation over a non-empty and compact choice set. The book then studies numerous refinements, generalizations and extensions of each of these restrictions — up to and including recent work on Behavioral theories of choice and choice behaviour when preferences are intransitive/incomplete/discontinuous. Also considered is choice behaviour in environments that are not necessarily compact. A study is also made of intertemporal choice and choice under uncertainty. The study of Arrow–Debreu choice theory and its extensions are presented from the Primal, Dual, and Revealed Preference points of view.

Consumers are not the only agents in the economy, as Producers are present as well. Beginning with a study of the Arrow–Debreu idea that producers choose from a convex production set so as to maximize profit, the book considers extensions and generalizations of this framework, particularly to non-convex environments. The study is presented from the Primal and Dual points of view.

The final chapter in the book provides a link to its Companion Volume. The Chapter indicates how the theories of consumer and producer choice studied here help inform answers of the second question posed above.

Contents:

• Axiomatics:
  • Introduction
  • Propositions, Predicate Calculus, Set Theory
  • Axiomatic Analysis
  • Conclusion
• The Arrow–Debreu Model:
  • Introduction
  • Outline of the Arrow–Debreu Model
  • Structural Features of an Arrow–Debreu Economy
  • Motivation for The Arrow–Debreu Model
  • Scientific Method and Meaningful Theorems
  • Conclusion
• Preferences, Choice Sets, and Best Elements:
  • Introduction
  • Arrow–Debreu Consumer Choice Theory (ADCT)
  • The Existence of Best Elements
  • The Fundamental Theorem of Choice Theory
  • Generalizations and Extensions of Proposition 3.4
  • Relaxing the Transitivity of Preferences
  • Relaxing the Continuity of Preferences
  • Relaxing the Completeness of Preferences
  • Relaxing Compactness of the Choice Set
  • Behavioral Alternatives to Preference Maximization
  • Conclusion
• Representing Preferences by Utility Functions:
  • Introduction
  • Do Utility Functions Exist?
  • Best Element Existence Given a Continuous Utility
  • Not All Preferences are Representable
  • Special Preferences and Their Utility Functions
  • Choice under Risk
  • Choice under Uncertainty
  • Intertemporal Choice
  • Conclusion
• The Primal Approach to Consumer Demand:
  • Introduction
  • Arrow–Debreu Consumer Demand Theory
  • An Arrow–Debreu Consumer's Demands
  • Behaviour of Consumer Demands
  • The Arrow–Debreu Budget Constraint
  • Some Special Demand Systems
  • Monotone Comparative Statics
  • Market Demand
  • Conclusion
• Consumer Theory via Duality:
  • Introduction
  • What is Duality?
  • An Arrow–Debreu Consumer's Expenditure Function
  • Convex Analysis and the Expenditure Function
  • The Demand Theory of an Expenditure Function
  • An Arrow–Debreu Consumer's Indirect Utility Function
  • The Demand Theory of the Indirect Utility Function
  • An Arrow–Debreu Consumer's Distance Function
  • An Arrow–Debreu Consumer's Benefit Function
  • An Arrow–Debreu Consumer's Frisch Profit Function
  • Some Further Dual Interrelationships
  • 'Economic' Preferences Representations
  • Comparative Statics Results in Optimization Models
  • Market Demands from a Dual Point of View
  • Conclusion
• Revealed Preference and Integrability:
  • Introduction
  • The Basic Set-Up of Revealed Preference Analysis
  • How Demanding is Revealed Preference?
  • Policy Making with Revealed Preference
  • The Integrability of Demand
  • Conclusion
• Production and Producers:
  • Introduction
  • Arrow–Debreu Producers
  • Arrow–Debreu Producers and the Law of Supply
  • Arrow–Debreu Producer Theory via Duality
  • The Slutsky Equation in a Production Economy
  • Relaxing Some Conditions on Y_j
  • Conclusion
• Conclusion:
  • Introduction
  • A Brief Outline of Economy-Wide Microeconomics
  • Conclusion

Readership: Advanced undergraduate students studying Economics, graduate students studying Economics, researchers specializing in Economics, and professional economists.

Key Features:

• This book provides an account of microeconomics research that covers all four fundamental parts: theory, applications, empirical tests, generalizations, and extensions
• This volume gives an account of microeconomics using an integrated, consistent, and overarching framework and narrative