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Weak axiom of revealed preference |
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Weak axiom of revealed preferenceThe assumption that a consumer who reveals strict preference for one bundle of goods over another will not, in other circumstances, reveal their preference for the second over the first. That is, if qi, qj are the vectors of goods purchased at prices pi, pj respectively, then piqi>piqj Þ pjqi>pjqj. Used in proving correlation results.Similar MatchesPreferencesPreferences1. In trade policy, this refers to special advantages, such as lower-than-MFN tariffs, accorded to another country's exports, usually in order to promote that country's development. See GSP. 2. In trade theory, this refers to the attitudes of consumers toward different goods, as represented by a utility function. Some propositions in trade theory use the assumption of identical and/or homothetic preferences. Identical preferencesIdentical preferencesThe assumption that individuals -- either within a country or in different countries -- have the same preferences. To be useful, since individuals' and countries' incomes may differ, the assumption is often used together with homothetic preferences. Community preferencesCommunity preferencesA set of consumer preferences, analogous to those of an individual as might be represented by a utility function, but representing the preferences of a group of consumers. The existence of well-behaved community preferences requires restrictive assumptions about individual preferences and/or incomes. Revealed preferenceRevealed preferenceThe use of the value of expenditure to "reveal" the preference of a consumer or group of consumers for the bundle of goods they purchase compared to other bundles of equal or smaller value. Used by Samuelson (1939) and Ohyama (1972), especially, to examine the gains from trade. Participating preference sharesParticipating preference sharesPreference shares which, in addition to paying a specified dividend, entitle preference shareholders to participate in receiving an additional dividend if ordinary shareholders are paid a dividend above a stated amount. Further SuggestionsInvoluntary liquidation preferenceHomothetic preferences Loan Preference Principle Preference stock cumulative preference shares Preference share Tax preference item preference shares Preference for variety Generalized System of Preferences redeemable preference shares Tariff preference stepped preference shares Liquidity preference hypothesis |
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