Solutions to the problems will be presented at the seminars in week 37.
Please direct any question to Kjell Arne Brekke (Room ES1032, Tel 228 41169,
E-mail: k.a.brekke@econ.uio.no)
Problem 1
Reconsider the person, discussed in class, who want to choose the next largest cake.
a) Write down the corresponding choice rule, de…ned over all subsets of
X = f s; m; l g where s denotes small, m medium and l large. Show that this choice rule is inconsistent with the weak axiom.
The reason for choosing the second larges cake is that choosing the largest would be unpolite.
b) Extend the description of the alternatives, X , to account for the politeness of the choice. De…ne a choice rule de…ned over subsets of this extended set of alternatives, but representing the same behavior, and show X can be choisen such that the choice rule is consistent with the weak axiom. Specify also the family of subsets of X that may appear in the given context.
c) Specify the preferences that would be revealed from the choice rule in b, and specify one possible utility function representing these preferences.
Problem 2: MasColell et al, Problem 2.F.17
Problem 3: MasColell et al, Problem 3.G.10+11
Problem 4: MasColell et al, Problem 3.G.16
Problem 5: MasColell et al, Problem 3.G.17
Problem 6: MasColell et al, Problem 3.I.3
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