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Biased representation of homothetic preferences on homogeneous sets

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Abstract

In the homogeneous case of one-dimensional objects, we show that any preference relation that is positive and homothetic can be represented by a quantitative utility function and unique bias. This bias may favor or disfavor the preference for an object. In the first case, preferences are complete but not transitive and an object may be preferred even when its utility is lower. In the second case, preferences are asymmetric and transitive but not negatively transitive and it may not be sufficient for an object to have a greater utility for be preferred. In this manner, the bias reflects the extent to which preferences depart from the maximization of a utility function.

Suggested Citation

  • Marc Le Menestrel & Bertrand Lemaire, 2004. "Biased representation of homothetic preferences on homogeneous sets," Economics Working Papers 794, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:794
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    References listed on IDEAS

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    1. Amartya Sen, 1997. "Maximization and the Act of Choice," Econometrica, Econometric Society, vol. 65(4), pages 745-780, July.
    2. Bertrand Lemaire & Marc Le Menestrel, 2004. "Homothetic interval orders," Economics Working Papers 793, Department of Economics and Business, Universitat Pompeu Fabra.
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    More about this item

    Keywords

    Intransitive preferences; incomplete preferences; irrational behavior; bias; procedural concerns; process of choice;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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