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Generalized Axiom of Revealed Preference (GARP)

The Generalized Axiom of Revealed Preference (GARP) is a fundamental concept in philosophy that has been debated and refined over centuries. At its core, GARP posits that there are two types of preferences: “preferences” and “expansions.” These two types of preferences are distinct from each other but share some common characteristics.

The Preference Type: A preference is a subjective, unstated, or uncontroversial opinion about an object or situation. It’s a personal opinion that is not necessarily based on objective facts or principles. Preferences can be thought of as “unconscious” opinions, such as “I prefer to eat before I sleep.” This type of preference is often characterized by:

  1. Uncertainty: Preferences are uncertain, meaning they lack clear-cut answers or principles that can be derived from observation or reason alone.
  2. Subjectivity: Preferences are personal and subjective, making them difficult to quantify or measure objectively.
  3. Unlimited range of possibilities: Preferences often have infinite possibilities, which is a hallmark of unanimity in philosophy.
  4. Lack of objective criteria: Preferences do not rely on objective principles or standards that can be derived from observation or reason alone.

The Expansion Type: A preference is an expansion, also known as a “expansion” or “extension,” which is a type of preference characterized by:

  1. Unlimited range of possibilities: Expansions are infinite in number and extent, making them uncontroversial or even impossible to prove true or false.
  2. Subjective nature: Expansions are personal opinions that are subjective and personal, making them difficult to quantify or measure objectively.
  3. Lack of objective criteria: Expanses do not rely on objective principles or standards that can be derived from observation or reason alone.
  4. Unlimited range of possibilities: Expanses often have infinite possibilities, which is a hallmark of unanimity in philosophy.
  5. Subjective nature: Expansions are personal and subjective, making them difficult to measure objectively.
  6. Lack of objective criteria: Expanses do not rely on objective principles or standards that can be derived from observation or reason alone.
  7. Unlimited range of possibilities: Expanses often have infinite possibilities, which is a hallmark of unanimity in philosophy.
  8. Subjective nature: Expansions are personal and subjective, making them difficult to measure objectively.
  9. Lack of objective criteria: Expanses do not rely on objective principles or standards that can be derived from observation or reason alone.
  10. Universal acceptance: The Generalized Axiom of Revealed Preference is a universal concept in philosophy, meaning it applies to all human beings and is considered true regardless of their background, culture, or circumstances.

In summary, the Generalized Axiom of Revealed Preference (GARP) posits that there are two types of preferences: “preferences” and “expansions.” These two types of preferences are distinct from each other but share some common characteristics, making them essential to understanding human nature and our capacity for true agreement or disagreement.

See also

Certainty Equivalent and Risk Premium

Screening and Signaling Equilibria

Menu Costs and Sticky Prices

Ricardian Equivalence

Adverse Selection Models