Munich Personal RePEc Archive

Consumer theory with bounded rational preferences

Gerasimou, Georgios (2009): Consumer theory with bounded rational preferences.


Download (264kB) | Preview


The neoclassical consumer maximizes utility and makes choices by completely preordering the feasible alternatives and weighing when indifferent. The consumer studied in this paper chooses by weighing when indifferent and also when indecisive, without necessarily preordering the alternatives or exhausting her budget. Preferences therefore need not be complete, transitive or non-satiated but are assumed strictly convex and "adaptive". The latter axiom is new and parallels that of ambiguity aversion in choice under uncertainty.

MPRA is a RePEc service hosted by
the Munich University Library in Germany.