Some Thoughts on the Principle of Revealed Preference

An individual decision maker is described by a number of economic theorists using three concepts: 1) a collection of objects wherein one is not required to recognize something in an objective manner; 2) mental preferences or how the mental attitude of someone towards something affects the actual choice; and 3) choice wherein a choice function specifies an individual's possible selections. A conventional approach would assume that the individual who will be making the decision would identify the set of objects in which he or she can choose from, that the choice function employed is consistent with his or her behavioral preferences, and that these behavioral preferences are similar to the mental preferences. This chapter attempts to further explain how the Revealed Preference principle complies with the standard economic approach in including mental preferences in economic models through three specific statements.