Revealed preference

Revealed preference infers a person's preferences from choices made among available options. It connects observed behavior to preference orderings without requiring direct reports of tastes.

Weak axiom of revealed preference: A consistency condition requiring that a chosen option not be directly revealed inferior to another option chosen from a different set. It formalizes a basic consistency test for choices used to infer preferences.
Preference relation: A relation ranking alternatives by how much an agent prefers one to another. Revealed-preference analysis aims to infer this latent ordering from choices.
Paul Samuelson: An American economist who shaped modern economic theory and introduced the revealed-preference approach in 1938. His early formulation made observed consumer choices the basis for preference analysis.
Demand estimation: The statistical estimation of how quantities demanded respond to prices, income, and other factors. Revealed choices provide data for estimating demand and the preferences that may generate it.
Stated preference: An approach inferring preferences from answers to surveys or hypothetical choice questions. It contrasts with inference from choices made in actual settings.
Generalized axiom of revealed preference: A condition ruling out cycles in revealed preference across sequences of observed choices. It extends pairwise consistency to chains of choices across multiple budget sets.
Utility function: A function assigning numerical values to alternatives so that higher values represent more-preferred options. Utility functions can represent preferences inferred from sufficiently consistent choice data.
Ordinal utility: A representation of preferences that preserves rankings without assigning meaningful magnitudes to utility differences. The approach offered a way to study rankings without relying on measurable utility.
Discrete choice: A model of decisions among a finite set of distinct alternatives. Observed selections among products, routes, or policies are analyzed as revealed preferences.
Preference utilitarianism: An ethical theory evaluating outcomes by how well they satisfy individuals' preferences. It uses preferences normatively, whereas revealed preference is primarily an inference method.

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