Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/25748 
Year of Publication: 
2006
Series/Report no.: 
CESifo Working Paper No. 1703
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Afriat (1967) showed the equivalence of the strong axiom of revealed preference and the existence of a solution to a set of linear inequalities. From this solution he constructed a utility function rationalizing the choices of a competitive consumer. We extend Afriat's theorem to a class of nonlinear budget sets. We thereby obtain testable implications of rational behavior for a wide class of economic environments, and a constructive method to derive individual preferences from observed choices. In an application to market games, we identify a set of observable restrictions characterizing Nash equilibrium outcomes.
JEL: 
D11
D43
C72
Document Type: 
Working Paper
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