Revealed Preference Theory

Discipline: Economics

Pioneered by American economist Paul Samuelson (1915- ), revealed preference theory is a method by which it is possible to discern consumer behavior on the basis of variable prices and incomes.

A consumer with a given income will buy a mixture of products; as his income changes, the mixture of goods and services will also change. It is assumed that the consumer will never select a combination which is more expensive than that which was previously chosen.

Revealed preference theory deliberately ignores measures of utility and indifference. An empirical utility theory, it superseded cardinal utility in consumer theory.

Also see: social welfare function

Source:
P A Samuelson, 'A Note on the Pure Theory of Consumers' Behaviour', Econometrica NS, 5 (1938), 353-54

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