Economics and Philosophy



Revealed preference, belief, and game theory


Daniel M. Hausman a1
a1 University of Wisconsin-Madison and London School of Economics

Abstract

The notion of ‘revealed preference’ is unclear and should be abandoned. Defenders of the theory of revealed preference have misinterpreted legitimate concerns about the testability of economics as the demand that economists eschew reference to (unobservable) subjective states. As attempts to apply revealed-preference theory to game theory illustrate with particular vividness, this demand is mistaken.