Rationality without Transitivity

Abstract

In this article rational choice behavior is investigated without assuming transitivity or completeness of the underlying preferences. These standard properties are replaced by a property concerning dominant alternatives. This permits the existence of preference cycles among alternatives which are dominated, while still ensuring the existence of a rational choice correspondence. We will also realize that some rational choice rules still hold in this context. Further we will see that in equilibrium analysis the existence of a competitive equilibrium follows when transitivity and completeness is replaced by this domination property.