IDEAS home Printed from https://ideas.repec.org/a/eee/mateco/v46y2010i4p453-466.html
   My bibliography  Save this article

Quantification of preferences in markets

Author

Listed:
  • Jörnsten, Kurt
  • Ubøe, Jan

Abstract

In this paper we quantify agent preferences in a market. In our framework every agent has a utility level associated with each transaction, and we assume that the probability of a feasible market transaction increases with an increase in total utility. It is surprising to observe that this simple behavioral principle induces a usually unique probability measure that can be constructed by a fast numerical algorithm. This unusual combination of a rigorous model and a fast numerical algorithm makes it possible to construct a well-defined set of preferences that implies a set of observed commodity prices.

Suggested Citation

  • Jörnsten, Kurt & Ubøe, Jan, 2010. "Quantification of preferences in markets," Journal of Mathematical Economics, Elsevier, vol. 46(4), pages 453-466, July.
    • Handle: RePEc:eee:mateco:v:46:y:2010:i:4:p:453-466
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304-4068(10)00022-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Krebs, Tom, 1997. "Statistical Equilibrium in One-Step Forward Looking Economic Models," Journal of Economic Theory, Elsevier, vol. 73(2), pages 365-394, April.
    2. T. R. Beard & Gabriel A. Lozada, 1999. "Economics, Entropy and the Environment," Books, Edward Elgar Publishing, number 1811.
    3. Foley Duncan K., 1994. "A Statistical Equilibrium Theory of Markets," Journal of Economic Theory, Elsevier, vol. 62(2), pages 321-345, April.
    4. Theil, Henri, 1969. "The Desired Political Entropy," American Political Science Review, Cambridge University Press, vol. 63(2), pages 521-525, June.
    5. Anas, Alex, 1983. "Discrete choice theory, information theory and the multinomial logit and gravity models," Transportation Research Part B: Methodological, Elsevier, vol. 17(1), pages 13-23, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kurt Jornsten & Jan Ubøe, 2009. "Strategic Pricing of Commodities," Applied Mathematical Finance, Taylor & Francis Journals, vol. 16(5), pages 385-399.
    2. Ubøe, Jan & Andersson, Jonas & Jörnsten, Kurt & Lillestøl, Jostein & Sandal, Leif, 2017. "Statistical testing of bounded rationality with applications to the newsvendor model," European Journal of Operational Research, Elsevier, vol. 259(1), pages 251-261.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jörnsten, Kurt & Ubøe, Jan, 2005. "Efficient Statistical Equilibria in Markets," Discussion Papers 2005/2, Norwegian School of Economics, Department of Business and Management Science.
    2. Alexis Toda, 2015. "Bayesian general equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(2), pages 375-411, February.
    3. Ellis Scharfenaker, Markus P.A. Schneider, 2019. "Labor Market Segmentation and the Distribution of Income: New Evidence from Internal Census Bureau Data," Working Paper Series, Department of Economics, University of Utah 2019_08, University of Utah, Department of Economics.
    4. Kurt Jornsten & Jan Ubøe, 2009. "Strategic Pricing of Commodities," Applied Mathematical Finance, Taylor & Francis Journals, vol. 16(5), pages 385-399.
    5. Theodosio, Bruno Miller & Weber, Jan, 2023. "Back to the classics: R-evolution towards statistical equilibria," ifso working paper series 28, University of Duisburg-Essen, Institute for Socioeconomics (ifso).
    6. Konstantinos Matakos & Riikka Savolainen & Orestis Troumpounis & Janne Tukiainen & Dimitrios Xefteris, 2024. "Electoral Institutions and Intraparty Cohesion," Journal of Political Economy Microeconomics, University of Chicago Press, vol. 2(4), pages 883-916.
    7. Juan Martín & Gustavo Nombela, 2007. "Microeconomic impacts of investments in high speed trains in Spain," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(3), pages 715-733, September.
    8. Miren Lafourcade & Jacques-François Thisse, 2011. "New Economic Geography: The Role of Transport Costs," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 4, Edward Elgar Publishing.
    9. Eliasson, Jonas & Mattsson, Lars-Göran, 2000. "A model for integrated analysis of household location and travel choices," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(5), pages 375-394, June.
    10. Scharfenaker, Ellis, 2020. "Implications of quantal response statistical equilibrium," Journal of Economic Dynamics and Control, Elsevier, vol. 119(C).
    11. E. Samanidou & E. Zschischang & D. Stauffer & T. Lux, 2001. "Microscopic Models of Financial Markets," Papers cond-mat/0110354, arXiv.org.
    12. Corrado Di Guilmi & Laura Carvalho, 2015. "The dynamics of leverage in a Minskyan model with heterogenous firms," Working Paper Series 28, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    13. Tanaka, Ken'ichiro & Toda, Alexis Akira, 2015. "Discretizing Distributions with Exact Moments: Error Estimate and Convergence Analysis," University of California at San Diego, Economics Working Paper Series qt7g23r5kh, Department of Economics, UC San Diego.
    14. AOYAMA Hideaki & IYETOMI Hiroshi & SOUMA Wataru & YOSHIKAWA Hiroshi, 2015. "Application of the Concept of Entropy to Equilibrium in Macroeconomics," Discussion papers 15070, Research Institute of Economy, Trade and Industry (RIETI).
    15. Jesús Ramos-Martín, 2003. "Empirismo en economía ecológica: una visión desde la teoría de los sistemas complejos," Revista de Economia Critica, Asociacion de Economia Critica, vol. 1, pages 75-93.
    16. YOSHIKAWA Hiroshi, 2013. "Stochastic Macro-equilibrium and Microfoundations for Keynesian Economics," Discussion papers 13039, Research Institute of Economy, Trade and Industry (RIETI).
    17. Konstantinos Matakos & Orestis Troumpounis & Dimitrios Xefteris, 2015. "Turnout and Polarization Under Alternative Electoral Systems," Studies in Political Economy, in: Norman Schofield & Gonzalo Caballero (ed.), The Political Economy of Governance, edition 127, pages 335-362, Springer.
    18. Yuri Biondi & Simone Righi, 2013. "What does the financial market pricing do? A simulation analysis with a view to systemic volatility, exuberance and vagary," Papers 1312.7460, arXiv.org.
    19. Wada, Junichiro & Kamahara, Yuta, 2018. "Studying malapportionment using α-divergence," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 77-89.
    20. Mercure, Jean-François, 2018. "Fashion, fads and the popularity of choices: Micro-foundations for diffusion consumer theory," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 194-207.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:46:y:2010:i:4:p:453-466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jmateco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.