IDEAS home Printed from https://ideas.repec.org/a/spr/homoec/v33y2016i4d10.1007_s41412-016-0032-1.html
   My bibliography  Save this article

Axiomatic Models of Rational Behavior and Interpretations

Author

Listed:
  • Susanne Fuchs-Seliger

    (Institut für Volkswirtschaftslehre (ECON), Karlsruher Institut für Technologie)

Abstract

In order to build a model of rational behavior in economics we can start with a function describing the agent’s behavior through reasonable properties from which preferences can be deduced. Conversely, the model can be based on a preference relation which is assumed to possess some properties implying the existence of a reasonable choice correspondence. Both approaches allow potent models of the individual’s behavior to be constructed. In this article it will be shown that the axioms of a model describing rational behavior by a real-valued function can be interpreted by the well-known income compensation function depending on a given preference relation. Accordingly, we will introduce a second model describing the individual behavior. As an interpretation the distance function, a widely used tool in economics, can be shown to fulfill the axioms of the second model. These different approaches make it possible to analyze choice behavior from different points of view. Hence, we may achieve a deeper insight into the economic problems lying behind these approaches.

Suggested Citation

  • Susanne Fuchs-Seliger, 2016. "Axiomatic Models of Rational Behavior and Interpretations," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 33(4), pages 385-401, December.
    • Handle: RePEc:spr:homoec:v:33:y:2016:i:4:d:10.1007_s41412-016-0032-1
    DOI: 10.1007/s41412-016-0032-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s41412-016-0032-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s41412-016-0032-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Lionel McKenzie, 1957. "Demand Theory Without a Utility Index," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(3), pages 185-189.
    2. N. Georgescu-Roegen, 1936. "The Pure Theory of Consumers Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 50(4), pages 545-593.
    3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    4. Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017, September.
    5. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, September.
    6. Weymark, John A, 1985. "Money-Metric Utility Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 219-232, February.
    7. Honkapohja, Seppo, 1987. "On Continuity of Compensated Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 545-557, October.
    8. Fuchs-Seliger, Susanne, 1990. "An axiomatic approach to compensated demand," Journal of Economic Theory, Elsevier, vol. 52(1), pages 111-122, October.
    9. Angus Deaton, 1979. "The Distance Function in Consumer Behaviour with Applications to Index Numbers and Optimal Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(3), pages 391-405.
    10. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
    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. Fuchs-Seliger, Susanne, 2019. "Structures of rational behavior in economics," Working Paper Series in Economics 136, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.

    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. Schlee, Edward E. & Ali Khan, M., 2023. "Money-metrics in local welfare analysis: Pareto improvements and equity considerations," Journal of Economic Theory, Elsevier, vol. 213(C).
    2. Fuchs-Seliger, Susanne, 2019. "Structures of rational behavior in economics," Working Paper Series in Economics 136, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    3. Edward E. Schlee & M. Ali Khan, 2022. "Money Metrics In Applied Welfare Analysis: A Saddlepoint Rehabilitation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 189-210, February.
    4. M. Ali Khan & Edward E. Schlee, 2016. "On Lionel McKenzie's 1957 intrusion into 20th‐century demand theory," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 589-636, May.
    5. Alcantud, J. C. R. & Manrique, A., 2001. "Continuous representation by a money-metric function," Mathematical Social Sciences, Elsevier, vol. 41(3), pages 365-373, May.
    6. Mehta, Ghanshyam B., 1995. "Metric utility functions," Journal of Economic Behavior & Organization, Elsevier, vol. 26(2), pages 289-298, March.
    7. Ali Khan, M. & Schlee, Edward E., 2017. "The nonconcavity of money-metric utility: A new formulation and proof," Economics Letters, Elsevier, vol. 154(C), pages 10-12.
    8. Chavas, Jean-Paul, 2013. "On Demand Analysis and Dynamics: A Benefit Function Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149683, Agricultural and Applied Economics Association.
    9. DECANCQ Koen & OLIVERA Javier & SCHOKKAERT Erik, 2018. "Program evaluation and ethnic differences: the Pension 65 program in Peru," LISER Working Paper Series 2018-21, Luxembourg Institute of Socio-Economic Research (LISER).
    10. Andrea Mantovi, 2016. "Smooth preferences, symmetries and expansion vector fields," Journal of Economics, Springer, vol. 119(2), pages 147-169, October.
    11. Bosmans, Kristof & Decancq, Koen & Ooghe, Erwin, 2018. "Who's afraid of aggregating money metrics?," Theoretical Economics, Econometric Society, vol. 13(2), May.
    12. Christopher Chambers & Takashi Hayashi, 2012. "Money-metric utilitarianism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 809-831, October.
    13. Decancq, Koen & Nys, Annemie, 2021. "Non-parametric well-being comparisons," European Economic Review, Elsevier, vol. 133(C).
    14. Pourya Valizadeh & Travis A Smith, 2020. "How Did The American Recovery and Reinvestment Act Affect the Material Well‐Being of SNAP Participants? A Distributional Approach," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(3), pages 455-476, September.
    15. Donaldson, David, 1992. "On The Aggregation Of Money Measures Of Well-Being In Applied Welfare Economics," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(1), pages 1-12, July.
    16. A. Mantovi, 2013. "Differential duality," Economics Department Working Papers 2013-EP05, Department of Economics, Parma University (Italy).
    17. Bernard M. S. van Praag & Nico L. van der Sar, 1988. "Household Cost Functions and Equivalence Scales," Journal of Human Resources, University of Wisconsin Press, vol. 23(2), pages 193-210.
    18. Fleurbaey, Marc & Maniquet, François, 2017. "Fairness and well-being measurement," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 119-126.
    19. Paolo Bertoletti & Giorgio Rampa, 2011. "On Marginal Returns and Inferior Inputs," Quaderni di Dipartimento 145, University of Pavia, Department of Economics and Quantitative Methods.
    20. Ming Chang, 1996. "Ramsey pricing in a hierarchical structure with an application to network-access pricing," Journal of Economics, Springer, vol. 64(3), pages 281-314, October.

    More about this item

    Keywords

    Economic models; Demand functions; Income compensation functions; Distance functions; Rationality; Preferences;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

    Statistics

    Access and download statistics

    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:spr:homoec:v:33:y:2016:i:4:d:10.1007_s41412-016-0032-1. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.