Constructive utility functions on Banach spaces (Q2518753)

Let \(X\) be a topological space and let ``\(\preceq\)'' be a preorder on \(X\) (a complete, reflexive, transitive binary relation). We say that ``\(\preceq\)'' is continuous if, for all \(x\in X\), the upper section \(U(x):=\{y\in X \,;\, y\succeq x\}\) and the lower section \(L(x):=\{y\in X \,;\, y\preceq x\}\) are closed subsets of \(X\). An important problem in mathematical economics is to find a continuous utility function for ``\(\preceq\)'' -- that is, a function \(u:X\longrightarrow\mathbb{R}\) which represents ``\(\preceq\)'' in the sense that \((x\preceq y) \Leftrightarrow (u(x)\leq u(y))\). Results like Debreu's theorem suffice to establish the existence of such a function, but in some cases, we want an explicit construction. In the case when \(X\) is a proper closed subset of Euclidean space \(\mathbb{R}^N\), Arrow and Hahn (1971) used the following construction: fix a minimal point \(x_0\in X\), and then, for all \(x\in X\), define \(u(x):= d[x_0,U(x)]\). (Here, for any closed subset \(Y\), we define \(d(x,Y):=\inf\{\|x-y\|\,;\, y\in Y\}\). Also, if \(X\) has no minimal points, then one must employ an ``extension argument'' to apply this technique). Arrow and Hahn's proof depends on the Heine-Borel property of \(\mathbb{R}^n\) (bounded closed sets are compact), so it does not extend easily to preorders on infinite-dimensional spaces, which have become increasingly important in economics (e.g. in the study of intertemporal preferences, intergenerational welfare orders. etc.). The goal of this paper is to extend the Arrow-Hahn construction to preorders defined on subsets of an infinite-dimensional Banach spaces. The three main results are stated, respectively, for the norm topology, the weak* topology, and the Mackey topology. In all three cases, \(E\) is a Banach space, \(X\) is a proper convex subset of \(E\) which is open in the norm topology, and ``\(\preceq\)'' is a preorder on \(X\). Say ``\(\preceq\)'' is convex if \(U(x)\) is convex for every \(x\in X\). Let \(x\in X\); we say \(x\) is locally satiated if there exists some \(\epsilon>0\) such that \(X\cap B(x,\epsilon)\subseteq L(x)\). The preorder ``\(\preceq\)'' has uniform satiation if the following holds: for any \(x,y\in X\), if \(x\) is locally satiated and \(x\sim y\), then \(y\) is also locally satiated. (In particular, this holds when ``\(\preceq\)'' satisfies nonsatiation, meaning that there are no locally satiated points). In all cases, we can define an Arrow-Hahn utility function as follows: Fix some \(e\in E\setminus X\), and then, for all \(x\in X\), define \(u(x):= d[e,U(x)]\). The three main results of the paper can then be roughly summarized as follows: \textbf{Theorem 1.} Suppose \(E\) is uniformly convex. Suppose ``\(\preceq\)'' is continuous in the norm topology, convex, and has uniform satiation. Suppose all upper contour sets are norm-closed in \(E\) {(not just in \(X\)).} Then, given two minor technical conditions {(relating ``\(\preceq\)'' to the norm topology)}, the Arrow-Hahn construction yields a continuous utility function for ``\(\preceq\)''. \textbf{Theorem 2.} Let \(F\) be a pre-dual for \(E\), and let \(w^*\) be the weak\(^*\) topology on \(E\) induced by \(F\). Suppose ``\(\preceq\)'' is \(w^*\)-continuous and has uniform satiation. Suppose all upper contour sets are \(w^*\)-closed in \(E\) {(not just in \(X\)).} Then the Arrow-Hahn construction yields a \(w^*\)-continuous utility function for ``\(\preceq\)''. \textbf{Theorem 3.} Let \(F\) be a pre-dual for \(E\), and let \(m\) be the Mackey topology on \(E\) induced by \(F\). Suppose ``\(\preceq\)'' is \(m\)-continuous, convex, and has uniform satiation. Suppose all upper contour sets are \(m\)-closed in \(E\) (not just in \(X\)). Finally, suppose every bounded and order-increasing net has a Cauchy subnet. Then the Arrow-Hahn construction yields an \(m\)-continuous utility function for ``\(\preceq\)''.