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A number of assumptions are typically made on preferences to give so-called “well-behaved indifference curves"

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  1. Introduction.
  2. Assumptions on preferences.
    1. Three axioms about preferences: The consumer is rational.
    2. Assumptions specific to well-behaved indifference curves.
  3. Assessment of these assumptions.
    1. Are the axioms of consumer theory reasonable?
    2. Are monotonicity, convexity and continuity reasonable assumptions?
  4. Conclusion.
  5. Bibliography.

The consumer choice theory aims, among other things, at modeling preferences that will guide the consumer in his choices. To do this, an assumption will be made: the consumer is able to rank any two consumption bundles as to their desirability, that is, the consumer is aware of his own tastes and knows how to use them rationally in order to maximize his utility. In the neoclassical model, preferences relations are established following from an evaluation of the consumer's behaviour. Hence, it is considered that if he always chooses a consumption bundle A over a consumption bundle B, even where B is available and affordable, then A is strictly preferred to B (A > B). Similarly, other preferences relations are recognised: indifference (A ~ B) which means that A is equally preferred to B and vice versa; weak preference (A ? B) which means that A is preferred at least as much as B. An indifference curve (IC) is a set of bundles all equally preferred to each others. In other words, the IC that goes through A is the set of all bundles y such that A ~ y.

[...] The assumptions about how preferences work are thus necessary for the theory to be coherent. Three axioms about preferences: the consumer is rational Among the assumptions we are to analyse, three are so fundamental that they are called of consumer theory. They reassert the rationality of the consumer. Completeness Here, the idea is that the consumer is able to rank any two bundles so that he chooses the one which provides him with most utility. That is, for any two bundles A and it is always possible to say either A B or A B. [...]

[...] Varian, Intermediate Microeconomics : A modern Approach, 6th edition, Norton The more the better The less the better û Á @ B Ò Ô ºÂæζ??{jYjHjHjHjHjH7 h?i h'=OJ[6]QJ[7]^J[8]mH sH ¹OJ[9]QJ[10]^J[11]mH sH h?i h+XOJ[12]QJ[13]^J[14]mH sH h?i h(JsOJ[15]QJ[16]^J[17]mH sH h?i OJ[18]QJ[19]^J[20]mH sH (h?i h?i CJ$OJ[21]QJ[22]^J[23]aJ$mH sH .h?i h(Js5?CJ0OJ[24]QJ[25]?^J[26]aJ0mH sH .h?i h?i 5?CJ0OJ[27]QJ[28]?^J[29]aJ0mH sH .h?i hNegative slope of ICs resulting from monotonicity Moving on higher downward-sloping ICs (i.e. moving toward the preferred set) implies getting more of x and y whereas in the case of upward-sloping ICs, it requires to forgo some of x and/or some of y. [...]

[...] Of all the assumptions made on preferences to give so-called behaved preferences?, we have seen that none of them appears to be absolutely unreasonable, and even that most of them not only hold, but are also essential for a best choice to exist. It is not difficult to isolate some cases where they do not hold, but that should not be seen as a failure of the model, for it primarily aims at describing general features of the choice-making process of consumers according to their preferences, not at catching all possible situations. [...]

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