Some Basic Techniques for Constructing Value Functions
Once we are convinced that the existence conditions for the value function are satisfied, or are willing to take the risk to simplify the problem so that we can focus on a value function, we may begin to construct a value function to represent the revealed preference information. One must realize that such an attempt is tantamount to the acceptance of the assumptions described in the previous sections. If one is not sure that the assumptions hold, then at best one can regard the value function to be derived as an approximation of the preference. Thus, admittedly, errors and biases may exist in the preference representation.
KeywordsDecision Maker Linear Programming Problem Consistency Condition Tangent Plane Ideal Point
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