Revealed Preference Theory


Both the Marshalian cardinal utility theory of demand and Hicks-Allen indifference curve analysis provide psychological explanation of consumer’s demand. They derive laws about the consumer’s demand from the consumers reaction psychologically to contain hypothetical changes in price and income but the revealed preference theory which has been put forward by Prof Samuelson seeks to explain consumers demand from his actual behavior in the market at various prices and income situation.

Note: This is published for the internal use (of St. Philomena's College students) only and hence requires verification. 

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