Econometrica: Oct, 1956, Volume 24, Issue 4

An Eclectic Approach to the Pure Theory of Consumer Behavior

https://doi.org/0012-9682(195610)24:4<451:AEATTP>2.0.CO;2-V
p. 451-466

Harvey M. Wagner

A framework for a static theory of consumer behavior is advanced which will not only subsume the standard indifference curve approach and the technique of "revealed preference," but will also admit a more general class of behavior patterns. The proposed theory analyzes consumer behavior from two related aspects, the first being that concerned with the consumer's subjective point of view as to his actions in the market, and the second being concerned with the economist's point of view as an objective observer of the consumer's market behavior. The paper deals with the n-commodity case, and makes no restrictive assumptions as to the regularity of the commodity space, existence of a utility function, continuity of consumption, or non-satiation in taste. In addition to the usual postulates for static analysis, only two behavioral axioms are assumed: (a) a revealed preference transitivity type axiom, and (b) a "no-price illusion" axiom (somewhat similar to the usual "no-money illusion" assumption). Demand theorems analogous to those commonly derived in consumer theory are proved by means of a generalized revealed preference approach and by the use of convex set theory in Euclidean n-space.