Section 2
Section 2
Section 2
Micro-1 TAs∗
September 13, 2023
1.C.1 Consider the choice structure (B, C(·)) with B = ({x, y}, {x, y, z}) and C({x, y}) =
x. Show that if (B, C(·)) satisfies the weak axiom, then we must have C({x, y, z}) =
{x}, = {z}, or = {x, z}.
Solution:
Firstly, by definition, C({x, y, z}) ̸= ∅. Then it is sufficient to show that y ̸∈ C({x, y, z}).
Proof by contradiction. Assume C({x, y, z}) ̸= ∅ and use WARP for B = {x, y, z} and
B ′ = {x, y}:
Notice, that all options {x}, {z}, {x, z} are possible. Indeed, the only pair of alternatives
that belongs to both sets in B is x, y. However, y has not been chosen in any of them.
Hence, the contradiction can not be built in terms of WARP. □
x ≥ y ⇐⇒ ∀ i = 1, . . . , k, xi ≥ yi .
Solution:
∗
Section notes are prepared by several generations of Micro-1 TAs: Olga Rospuskova (2022), Alexey
Belyaev (2022), Alena Gorbuntsova (2023), Anastas Akopian (2023). Please contact your TA if a
mistake is found!
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2) Let X = R3 , and define a binary relation R on X by the following rule:
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X
∀ x, y ∈ X, x R y ⇐⇒ Q (x, y) ≥ 0, where Q (x, y) =
p
sign (xi − yi ) |xi − yi |
i=1
Here, sign α is the sign of a real number. Note that Q (x, y) = −Q (y, x).
(i) Determine if R is complete of not.
(i) Complete. We need to show that ∀x, y ∈ X, xRy or yRx. Indeed, Q is defined
for any pair x, y ∈ R3 and maps it into R, on which natural ≥ is complete, so it is
always true that either Q (x, y) ≥ 0 or 0 ≥ Q (x, y). So, provided with Q (x, y) =
−Q (y, x) we immediately get that it is always true that either Q (x, y) ≥ 0 or
Q (y, x) ≥ 0, which completes the proof.
• symmetric: x R y =⇒ (y R x)
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(i) Firstly, let me write definition of these preferences:
∀x, y ∈ X, x ≻ y ⇐⇒ x ≿ y & ¬[y ≿ x]
Transitivity: Let’s consider any x, y, z from X such that [x ≻ y & y ≻ z].
Firstly, [x ≻ y & y ≻ z] ⇐⇒
⇐⇒ [x ≿ y & ¬(y ≿ x) & y ≿ z & ¬(z ≿ y)] ============⇒ [x ≿ z].
by transitivity of ≿
Now let z ≿ x. Then by transitivity of ≿:
z ≿ x & x ≿ y =⇒ z ≿ y, but it contradicts one of the conditions above:
¬(z ≿ y), so ¬(z ≿ x) and we obtained second part of definition of z ≻ x, so ≻ is
indeed transitive.
Asymmetry: We should prove that ∀x, y ∈ X, x ≻ y =⇒ ¬(y ≻ x). Let’s
consider any x, y ∈ X : x ≻ y. Proof by contradiction: let’s also suggest y ≻ x.
From transitivity, which is already proven, we get y ≻ y ⇐=======⇒ y ≿ y &
by def inition
¬(y ≿ y), so we have contradiction, which proves asymmetry of ≻.
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Since x ≿ z and z ≿ x, x ∼ z as we seek.
To prove symmetry, pick any x, y ∈ X with x ∼ y. By definition of indifference
preference relation, we have x ≿ y and y ≿ x. The last two facts imply y ∼ x.
Thus, x ∼ y ⇒ y ∼ x as we seek.
x ≿P y ⇐⇒ ¬(yP x).
Show that ≿P is a complete and transitive binary relation. Moreover, its strict part ≻P
equals P . (Conclusion: We can as well take a strict preference P as our primitive, and
derive from that a weak preference ≿P ).
Solution:
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□
5) Consider a choice structure (B, C(·)) on a set X. Show that if C is single valued,
that is, if a unique alternative is chosen from each B ∈ B, then WARP is equivalent to
the following statement:
For any x, y ∈ X with x ̸= y, if x ∈ C(B) and y ∈ B for some B ∈ B, then for any
B ′ ∈ B with y ∈ C(B ′ ), we have x ∈ / B′.
Interpret this statement in terms of the revealed preferences of the agent.
Solution:
Definition. The choice structure (B, C(·)) satisfies the weak axiom of revealed
preference (WARP) if the following property holds:
Firstly, let’s prove that WARP implies the statement . Assume that statement does not
hold. That is, for some x, y ∈ X(x ̸= y) and for some B ∈ B : x ∈ C(B) and y ∈ B,
and there exists B ′ ∈ B such that y ∈ C(B ′ ) and x ∈ B ′ .
That is, x, y ∈ B ∩ B ′ , x ∈ C(B), y ∈ C(B ′ ). Then, by WARP x ∈ C(B ′ ). But since
C(·) is single-valued, it cannot be the case. Contradiction.
Secondly, let’s prove that statement implies WARP. Let’s formulate WARP in terms
of 2 implications: [∃B ∈ B : x, y ∈ B & x ∈ C(B)] =⇒ [∀B ′ : (x ∈ B ′ &
y ∈ C(B ′ )) =⇒ x ∈ C(B ′ )]. If x = y in WARP then WARP is always true (it
becomes tautological), so this case does not violate implication. Further I consider
x ̸= y. To understand, why provided with statement we obtain WARP, one should
know that if premise of implication is false, than implication itself is true. Actually,
given statement, [x ∈ B ′ & y ∈ C(B ′ )] is always false (because statement states that
y ∈ C(B ′ ) =⇒ x ̸∈ B ′ ), so premise of inner implication of WARP is always false, so
inner implication is always true, so outer implication is always true. □
Definition Given a choice structure (B, C(·)) the revealed preference relation ≿∗
is defined by
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6) One more equivalence to WARP for a single-valued choice
function.
Consider a choice structure (B, C(·)) on a set X. If C is single valued, then WARP is
equivalent to the following statement:
For any pair of sets B and B ′ , if C(B ′ ) belongs to B, and C(B ′ ) is not equal to C(B),
then C(B) does not belong to B ′ .
Proof:
In other words, we need to show: