Motivation
Revealed preference theory tries to understand the preferences of a consumer among bundles of goods, given her budget constraint. For instance, if the consumer buys bundle of goods A over bundle of goods B, where both bundles of goods are affordable, it is revealed that she directly prefers A over B. It is assumed that the consumer's preferences are stable over the observed time period, i.e. the consumer will not reverse her relative preferences regarding A and B.
As a concrete example, if a person chooses 2 apples/3 bananas over an affordable alternative 3 apples/2 bananas, then we say that the first bundle is revealed preferred to the second. It is assumed that the first bundle of goods is always preferred to the second, and that the consumer purchases the second bundle of goods only if the first bundle becomes unaffordable.
Read more about this topic: Revealed Preference
Famous quotes containing the word motivation:
“Self-determination has to mean that the leader is your individual gut, and heart, and mind or we’re talking about power, again, and its rather well-known impurities. Who is really going to care whether you live or die and who is going to know the most intimate motivation for your laughter and your tears is the only person to be trusted to speak for you and to decide what you will or will not do.”
—June Jordan (b. 1939)