Independence of irrelevant alternatives and revealed group preferences

Authors
  • P.P. Wakker
  • H.J.M. Peters
Publication date 1990
Host editors
  • A.N. Ichiishi
  • A. Neyman
  • Y. Tauman
Book title Game theory and applications
ISBN
  • 0123701821
  • 9780123701824
Series Economic theory, econometrics, and mathematical economics
Pages (from-to) 404-406
Publisher New York: Academic Press
Organisations
  • Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
Abstract It is shown that a Pareto optimal and continuous single-valued choice function defined on the compact convex subsets of the positive orthant of the plane maximizes a real-valued function if and only if it satisfies the independence of irrelevant alternatives condition. Further, this real-valued function must be strongly quasiconcave. The result can be applied to consumer demand theory to deal with nonlinear budget sets, and to bargaining game theory to generalize the Nash bargaining solution.
Document type Chapter
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