Foundations of Contemporary Revealed Preference Theory

This paper examines methodological issues raised by revealed preference theory in economics: particularly contemporary revealed preference theory. The paper has three goals. First, to make the case that revealed preference theory is a broad research program in choice theory-not a single theory-and understanding this diversity is essential to any methodological analysis of the program. Second, to explore some of the existing criticisms of revealed preference theory in a way that emphasizes how the effectiveness of the critique depends on the particular version of revealed preference under consideration. Finally, three additional criticisms are presented that are aimed specifically at contemporary revealed preference theory. I imagine that you are right that many individuals looking at this paper will be induced to believe that there is after all very little, and very little of interest, in the modern theory of consumer's behavior. However, if this is indeed the truth, we should not try to keep it a secret. By all means let us make clear how little and how much the existing theories of economics contain. (Paul Samuelson to Hendrik Houthakker July 31, 1952(1))