Nice demand and concavifiable smooth preferences: Determinateness of a utility function

DOI10.1016/0304-4068(92)90027-5MaRDI QIDQ1802945zbMATH OpenOpenAlexFDO

Authors Sho-Ichiro Kusumoto

Publication date 29 June 1993

Published in Journal of Mathematical Economics (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/0304-4068(92)90027-5

zbMATH Keywords

differentiable demandFenchel's one-point conditionsleast-concavifiable smooth preferencesPareto hypothesisstrongly convex binary preferences

Mathematics Subject Classification ID

Utility theory (91B16)

Review text

Taking a new approach this paper shows: Given strongly convex binary preferences, the differentiability of demand and the concavifiability of smooth preference will allow us to select a utility function that is least concave, generating inferior as well as normal demands. The utility function is unique up to affine transformations so that the sign pattern of its cross derivatives are determinate. Established are three fundamental theorems justifying the controversial hypothesis that Pareto had made on the cross derivatives of a utility and that was thought redundant from an ordinalist's view point. A main result shows, at points where the income derivative of marginal utility of money vanishes and therefore the utility is least-concavifiable, the Pareto-Edgeworth-Kannai complements of a normal (resp., inferior) commodity, each being pairwise defined to a commodity as a positive cross-derivative of the least concave utility, are normal (resp. inferior), and, conversely for the P.E.K. substitutes. This serves to show that, on the contrary to the ordinalistic viewpoint, such a hypothesis, how introspective it may be, will be able to lead to an operationally meaningful economic prediction which can be statistically refutable.

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Cited in

(5)

• Preferences and normal goods: A sufficient condition
• On the demand generated by a smooth and concavifiable preference ordering
• scientific article; zbMATH DE number 4057234 (Why is no real title available?)
• Demand properties of concavifiable preferences
• Preferences and normal goods: an easy-to-check necessary and sufficient condition

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