Lectures in the Microeconomics of Choice: Foundations, Consumers, and Producers

People pursue their own interests, whatever those interests might be. Some people have interests that are narrow and selfish, others have interests that are broad and altruistic, still others have interests that vary and are somewhere in between. The bedrock idea that people are self-interested (and from which all economic analysis proceeds) raises two fundamental questions. Firstly: How is it that people choose the actions they think will further their interests? Secondly: What are the social and economic consequences of the interaction of the (potentially conflicting) choices made by different people? This book is devoted to a detailed study of the first question.The book begins with the Arrow-Debreu theory of consumer choice. This theory supposes people choose so as to maximize a complete, continuous, transitive, and reflexive binary preference relation over a non-empty and compact choice set, under conditions of certainty and in an atemporal context. The book then studies numerous intriguing and ingenious modifications, relaxations, and generalizations of each of these restrictions that have appeared in the literature -- and which continue to appear in the literature -- over the past several decades. This is up to and including recent work on Behavioral theories of choice. The study is presented from the Primal, Dual, and Revealed Preference points of view.Consumers are not the only agents in an economy, as Producers are present as well. Starting with the Arrow-Debreu idea that producers choose from a convex production set so as to maximize profit, a study is made of some of the extensions, modifications, and generalizations of this framework that have appeared in the literature. The study is presented from the Primal and Dual points of view.The final chapter in this book provides a link to its Companion Volume (Economy-Wide Microeconomics: Equilibrium, Optimality, Applications and Tests). That Volume takes the theories of consumer and producer choice encountered in this Book and makes a detailed study of the second question posed above.