Lexicographic Preferences

Lexicographic preferences (lexicographical order based on the order of amount of each good) describe comparative preferences where an economic agent infinitely prefers one good (X) to another (Y). Thus if offered several bundles of goods, the agent will choose the bundle that offers the most X, no matter how much Y there is. Only when there is a tie of Xs between bundles will the agent start comparing Ys.

For example, if for a given bundle (X;Y;Z) an agent orders his preferences according to the rule X>Y>Z, then the bundles {(5;3;3), (5;1;6), (3,5,3)} would be ordered, from most to least preferred:

1. 5;3;3
2. 5;1;6
3. 3;5;3

• Even though the first option contains fewer total goods than the second option, it is preferred because it has more Y. Note that the number of X's is the same, and so the agent is comparing Y's.
• Even though the third option has the same total goods as the first option, the first option is still preferred.
• Even though the third option has far more Y than the second option, the second option is still preferred because it has slightly more X.