PPT-1 Consumer Choice, Utility, and Revealed Preference

2 Agenda Consumer Utility Consumer Choice Revealed Preference 3 Consumer Theory There are two important pillars that consumer theory rests upon The utility function The budget constraint 4. Panel Data. Repeated Choice Situations. Typically RP/SP constructions (experimental). Accommodating “panel data”. Multinomial Probit [Marginal, impractical]. Latent Class. Mixed Logit. Application: Shoe Brand Choice. MICROECONOMICS. Principles and Analysis. . Frank Cowell . July 2015. 1. Overview. July 2015. 2. The setting. Budget sets. Revealed Preference. Axiomatic Approach. Consumption: Basics. The environment for the basic consumer optimisation problem . William Greene. Stern School of Business. New York University. 0 Introduction. 1 . Summary. 2 Binary Choice. 3 Panel Data. 4 Bivariate Probit. 5 Ordered Choice. 6 Count Data. 7 Multinomial Choice. 8 Nested Logit. . decisions. in . conditions. . of. . information. . uncertainty. Tomas . Macak. MANAGEMENT THEORY. Faculty of Economics and Management. Department of Management. Organization of teaching. Consultation time: Monday from 10.00 to 11.30 in the morning. Office No. E 468 (4th floor of the building of the Faculty of Business and Economics). Phone: 224 382 029, email: macak@pef.czu.cz. Part I. CONSUMER THEORY. Laura Sochat. Budget constraint I. Income is one of the factors affecting the quantity demanded by consumers. . I like to spend money on food and on clothes. Assume they cost £5/g and £10/unit respectively. Also assume that my weekly income is £200.. University of Texas at Austin. Chandra R. . Bhat. Introduction: . Choice Modeling. A set of tools to predict the choice behavior of a group of decision-makers in a specific choice context.. Picture Reference: Future and Simple-Choice Modeling (by Steve Cook and Michael McGee). Ch. 18, R.A. Arnold, Economics 9. th. Ed. Diamond – Water Paradox. This is the name of another interesting observation by Adam Smith.. He observed that sometimes the things which are most useful to us (e.g. water) have a relatively/comparatively low price and things which have little use (e.g. diamond) have a relatively high price.. Some amount of income inequality is to be expected in a market economy.. Wage discrimination accounts for a small amount (3–5%) of wage differences.. Women still earn less than men, although the gap has narrowed.. ATLIO RVOL 102 NO 5consideration set is not affected when becomes unavailable Furthermore this property is also satis30ed when the formation is based on many decision heuristics such as paying attent their feedback particularly Alan Manning Revealed preference theory constructs utrationalize empirical observations of consumer choices and consumer budget constraints Samuelson 1938 1948 mists usuall Lecture 10. Me in Prague some years ago!. Individual experiments. I have decided to make the . last lecture in this course (Lecture 12) . a sort of general overview.. In . the lectures 10 and 11, . I will talk about individual experiments.. Introduction. Supply and Demand Models (Ch. 2) are useful for analyzing economic questions concerning markets.. How will increasing the real wage affect output?. In these models we summed each individuals demand to obtain the market demand curve.. 3.5. ●. . marginal utility (MU) . Additional satisfaction obtained from consuming one additional unit of a good.. ●. . diminishing marginal utility . Principle that as more of a good is consumed, the consumption of additional amounts will yield smaller additions to utility.. Lizheng Shi, PhD, . MsPharm. Regents Professor and Interim Chair. Department of Health policy and Management. School of Public Health and Tropical Medicine. Funded by BioMarin Pharmaceutical, which provided input into study design..