Question

Tim has rational preferences %A, and Jim has rational preferences %B. However, Jim is a bit...

Tim has rational preferences %A, and Jim has rational preferences %B. However, Jim is a bit insecure, so when asked to report preferences between two alternatives, he first asks Tim which option he prefers. If Tim strictly prefers one over the other, then Jim reports Tim’s preference as his own. If Tim is indifferent between the two alternatives, then Jim reports his own true preference. In this way, we get a third preference ordering, Jim’s reported preference %R. Is %R complete? Transitive? Explain.

Homework Answers

Answer #1

Completeness of a preference: Preferences of a consumer is considered to be complete when the consumer is able to rank his preferences of all the goods available to him in a proper order.

Transitivity in preferences : The consumer's preferences are said to be transitive when the consumer's relative preference between two or three goods is clearly stated. Suppose if the consumer is faced with three goods, A B and C. If the consumer prefers A over B and B over C, then the consumer will always prefer A over C. This fact will always hold.

In the above situation, we are left with two cases,

case 1: When Jim's strictly states his preferences: In this case, whatever Jim will choose, Tim will choose that combination as well.If Jim prefers combination A, Tim will also prefer combination A but if Jim prefers combination B, Tim will also prefer combination B. There is an inconsistency in decision and choice of selection between A and B. So we see that, Tim's preference in this case is neither complete nor transitive.

Case 2: When Jim is indifferent between the combinations: In this case, since Jim is indifferent between both the combinations, Tim strictly states his preference which is R. Now this R preference is clearly stated by Tim and is ranked higher than other combinations in terms of preference. Also, since this combination will always be preferred by Tim over the other combinations, this implies that Tim's preference with respect to R is transitive. So individually if we consider case 2, then R can be said to be transitive and complete

But when the entire situation is taken into consideration, either of the case can happen. This makes Tim's preferences lack clarity and consistency as we see that Tim's preference is hugely dependent upon Jim's preferences.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Tim gets utility from only two goods, rice (R) and beans (B). His preferences are...
1. Tim gets utility from only two goods, rice (R) and beans (B). His preferences are represented by the utility function U(R,B) = R x B^2 a. Compute Tim’s marginal rate of substitution, as a function of R and B. b. Suppose Tim’s income is 10000 and the prices of rice and beans are R p and B p (both > 0). Write Tim’s budget constraint. c. Compute Tim’s demand function for rice. d. For Tim, are rice and beans...
Tim is trying to make a decision whether to go golfing or to go to a...
Tim is trying to make a decision whether to go golfing or to go to a concert. Suppose the ticket for a round of golf costs $50, and the ticket for a concert costs $100. It takes 4 hours for a round of golf, but only 2 hours for a concert. Tim’s hourly wage is $50. Suppose Tim is rational and enjoys golfing and concert equally, what would his choice be? A) Tim will go golfing, because the ticket costs...
Jim and Sue had been planning to have a child for two years. Finally, she became...
Jim and Sue had been planning to have a child for two years. Finally, she became pregnant. However, their marriage had been a rough one, and by the time she was in her third month of pregnancy they had decided to divorce. At that point, both parents were ambivalent about the pregnancy. They had both wanted the child, but now things were different. Sue finally decided that she did not want to raise a child alone and did not want...
Father’s Consent to Abortion Source: eText, p. 150 Jim and Sue had been planning to have...
Father’s Consent to Abortion Source: eText, p. 150 Jim and Sue had been planning to have a child for two years. Finally, she became pregnant. However, their marriage had been a rough one, and by the time she was in her third month of pregnancy they had decided to divorce. At that point, both parents were ambivalent about the pregnancy. They had both wanted the child, but now things were different. Sue finally decided that she did not want to...
URGENT!! 6 Multiple Choice Questions with the correct answers from the article below. Authenticity has become...
URGENT!! 6 Multiple Choice Questions with the correct answers from the article below. Authenticity has become the gold standard for leadership. But a simplistic understanding of what it means can hinder your growth and limit your impact. Consider Cynthia, a general manager in a health care organization. Her promotion into that role increased her direct reports 10-fold and expanded the range of businesses she oversaw—and she felt a little shaky about making such a big leap. A strong believer in...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...
What tools could AA leaders have used to increase their awareness of internal and external issues?...
What tools could AA leaders have used to increase their awareness of internal and external issues? ???ALASKA AIRLINES: NAVIGATING CHANGE In the autumn of 2007, Alaska Airlines executives adjourned at the end of a long and stressful day in the midst of a multi-day strategic planning session. Most headed outside to relax, unwind and enjoy a bonfire on the shore of Semiahmoo Spit, outside the meeting venue in Blaine, a seaport town in northwest Washington state. Meanwhile, several members of...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT