General Revealed Preference Theory

Abstract

We provide general conditions under which an economic theory has a universal axiomatization: one that leads to testable implications. Roughly speaking, if we obtain a universal axiomatization when we assume that unobservable parameters (such as preferences)are observable, then we can obtain a universal axiomatization purely on observables. The result "explains" classical revealed preference theory, as applied to individual rational choice. We obtain new applications to Nash equilibrium theory and Pareto optimal choice.

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