Revealed cardinal preference

I prove that as long as we allow the marginal utility for money (lambda) to vary between purchases (similarly to the budget) then the quasi-linear and the ordinal budget-constrained models rationalize the same data. However, we know that lambda is approximately constant. I provide a simple constructive proof for the necessary and sufficient condition for the constant lambda rationalization, which I argue should replace the Generalized Axiom of Revealed Preference in empirical studies of consumer behavior. 'Go Cardinals!' It is the minimal requirement of any scientifi c theory that it is consistent with the data it is trying to explain. In the case of (Hicksian) consumer theory it was revealed preference -introduced by Samuelson (1938,1948) - that provided an empirical test to satisfy this need. At that time most of economic reasoning was done in terms of a competitive general equilibrium, a concept abstract enough so that it can be built on the ordinal preferences over baskets of goods - even if the extremely specialized ones of Arrow and Debreu. However, starting in the sixties, economics has moved beyond the 'invisible hand' explanation of how -even competitive- markets operate. A seemingly unavoidable step of this 'revolution' was that ever since, most economic research has been carried out in a partial equilibrium context. Now, the partial equilibrium approach does not mean that the rest of the markets are ignored, rather that they are held constant. In other words, there is a special commodity -call it money - that reflects the trade-offs of moving purchasing power across markets. As a result, the basic building block of consumer behavior in partial equilibrium is no longer the consumer's preferences over goods, rather her valuation of them, in terms of money. This new paradigm necessitates a new theory of revealed preference

Quantum correlations from local amplitudes and the resolution of the Einstein-Podolsky-Rosen nonlocality puzzle

The Einstein-Podolsky-Rosen nonlocality puzzle has been recognized as one of the most important unresolved issues in the foundational aspects of quantum mechanics. We show that the problem is resolved if the quantum correlations are calculated directly from local quantities which preserve the phase information in the quantum system. We assume strict locality for the probability amplitudes instead of local realism for the outcomes, and calculate an amplitude correlation function.Then the experimentally observed correlation of outcomes is calculated from the square of the amplitude correlation function. Locality of amplitudes implies that the measurement on one particle does not collapse the companion particle to a definite state. Apart from resolving the EPR puzzle, this approach shows that the physical interpretation of apparently `nonlocal' effects like quantum teleportation and entanglement swapping are different from what is usually assumed. Bell type measurements do not change distant states. Yet the correlations are correctly reproduced, when measured, if complex probability amplitudes are treated as the basic local quantities. As examples we discuss the quantum correlations of two-particle maximally entangled states and the three-particle GHZ entangled state.Comment: Std. Latex, 11 pages, 1 table. Prepared for presentation at the International Conference on Quantum Optics, ICQO'2000, Minsk, Belaru

Correlation functions, Bell's inequalities and the fundamental conservation laws

I derive the correlation function for a general theory of two-valued spin variables that satisfy the fundamental conservation law of angular momentum. The unique theory-independent correlation function is identical to the quantum mechanical correlation function. I prove that any theory of correlations of such discrete variables satisfying the fundamental conservation law of angular momentum violates the Bell's inequalities. Taken together with the Bell's theorem, this result has far reaching implications. No theory satisfying Einstein locality, reality in the EPR-Bell sense, and the validity of the conservation law can be constructed. Therefore, all local hidden variable theories are incompatible with fundamental symmetries and conservation laws. Bell's inequalities can be obeyed only by violating a conservation law. The implications for experiments on Bell's inequalities are obvious. The result provides new insight regarding entanglement, and its measures.Comment: LaTeX, 12pt, 11 pages, 2 figure

A test of Local Realism with entangled kaon pairs and without inequalities

We propose the use of entangled pairs of neutral kaons, considered as a promising tool to close the well known loopholes affecting generic Bell's inequality tests, in a specific Hardy-type experiment. Hardy's contradiction without inequalities between Local Realism and Quantum Mechanics can be translated into a feasible experiment by requiring ideal detection efficiencies for only one of the observables to be alternatively measured. Neutral kaons are near to fulfil this requirement and therefore to close the efficiency loophole.Comment: 4 RevTeX page

Testing Bell's inequality with two-level atoms via population spectroscopy

We propose a feasible experimental scheme, employing methods of population spectroscopy with two-level atoms, for a test of Bell's inequality for massive particles. The correlation function measured in this scheme is the joint atomic $Q$ function. An inequality imposed by local realism is violated by any entangled state of a pair of atoms.Comment: 4 pages, REVTeX, no figures. More info on http://www.ligo.caltech.edu/~cbrif/science.htm

Testing Consumer Rationality using Perfect Graphs and Oriented Discs

Given a consumer data-set, the axioms of revealed preference proffer a binary test for rational behaviour. A natural (non-binary) measure of the degree of rationality exhibited by the consumer is the minimum number of data points whose removal induces a rationalisable data-set.We study the computational complexity of the resultant consumer rationality problem in this paper. This problem is, in the worst case, equivalent (in terms of approximation) to the directed feedback vertex set problem. Our main result is to obtain an exact threshold on the number of commodities that separates easy cases and hard cases. Specifically, for two-commodity markets the consumer rationality problem is polynomial time solvable; we prove this via a reduction to the vertex cover problem on perfect graphs. For three-commodity markets, however, the problem is NP-complete; we prove thisusing a reduction from planar 3-SAT that is based upon oriented-disc drawings

Constructive updating/downdating of oblique projectors: a generalization of the Gram-Schmidt process

A generalization of the Gram-Schmidt procedure is achieved by providing equations for updating and downdating oblique projectors. The work is motivated by the problem of adaptive signal representation outside the orthogonal basis setting. The proposed techniques are shown to be relevant to the problem of discriminating signals produced by different phenomena when the order of the signal model needs to be adjusted.Comment: As it will appear in Journal of Physics A: Mathematical and Theoretical (2007

Realistic interpretation of a superposition state does not imply a mixture

Contrary to previous claims, it is shown that, for an ensemble of either single-particle systems or multi-particle systems, the realistic interpretation of a superposition state that mathematically describes the ensemble does not imply that the ensemble is a mixture. Therefore it cannot be argued that the realistic interpretation is wrong on the basis that some predictions derived from the mixture are different from the corresponding predictions derived from the superposition state

The Combinatorial World (of Auctions) According to GARP

Revealed preference techniques are used to test whether a data set is compatible with rational behaviour. They are also incorporated as constraints in mechanism design to encourage truthful behaviour in applications such as combinatorial auctions. In the auction setting, we present an efficient combinatorial algorithm to find a virtual valuation function with the optimal (additive) rationality guarantee. Moreover, we show that there exists such a valuation function that both is individually rational and is minimum (that is, it is component-wise dominated by any other individually rational, virtual valuation function that approximately fits the data). Similarly, given upper bound constraints on the valuation function, we show how to fit the maximum virtual valuation function with the optimal additive rationality guarantee. In practice, revealed preference bidding constraints are very demanding. We explain how approximate rationality can be used to create relaxed revealed preference constraints in an auction. We then show how combinatorial methods can be used to implement these relaxed constraints. Worst/best-case welfare guarantees that result from the use of such mechanisms can be quantified via the minimum/maximum virtual valuation function

Nonlocality, Bell's Ansatz and Probability

Quantum Mechanics lacks an intuitive interpretation, which is the cause of a generally formalistic approach to its use. This in turn has led to a certain insensitivity to the actual meaning of many words used in its description and interpretation. Herein, we analyze carefully the possible mathematical meanings of those terms used in analysis of EPR's contention, that Quantum Mechanics is incomplete, as well as Bell's work descendant therefrom. As a result, many inconsistencies and errors in contemporary discussions of nonlocality, as well as in Bell's Ansatz with respect to the laws of probability, are identified. Evading these errors precludes serious conflicts between Quantum Mechanics and both Special Relativity and Philosophy.Comment: 8&1/2 pages revtex; v2: many corrections, clairifications & extentions, all small; v3: editorial scru