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

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

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

Spin-dependent Bohm trajectories associated with an electronic transition in hydrogen

The Bohm causal theory of quantum mechanics with spin-dependence is used to determine electron trajectories when a hydrogen atom is subjected to (semi-classical) radiation. The transition between the 1s ground state and the 2p0 state is examined. It is found that transitions can be identified along Bohm trajectories. The trajectories lie on invariant hyperboloid surfaces of revolution in R^3. The energy along the trajectories is also discussed in relation to the hydrogen energy eigenvalues.Comment: 18 pages, 8 figure

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

Weyl’s gauge argument

The standard U(1) “gauge principle” or “gauge argument” produces an exact potential A=dλ and a vanishing field F=ddλ=0. Weyl has his own gauge argument, which is sketchy, archaic and hard to follow; but at least it produces an inexact potential A and a nonvanishing field F=dA≠0. I attempt a reconstruction

Propagation of local decohering action in distributed quantum systems

We study propagation of the decohering influence caused by a local measurement performed on a distributed quantum system. As an example, the gas of bosons forming a Bose-Einstein condensate is considered. We demonstrate that the local decohering perturbation exerted on the measured region propagates over the system in the form of a decoherence wave, whose dynamics is governed by elementary excitations of the system. We argue that the post-measurement evolution of the system (determined by elementary excitations) is of importance for transfer of decoherence, while the initial collapse of the wave function has negligible impact on the regions which are not directly affected by the measurement.Comment: 6 REVTeX pages, no figures. Introduction and discussion sections are extende

Social welfare and profit maximization from revealed preferences

Consider the seller's problem of finding optimal prices for her $n$ (divisible) goods when faced with a set of $m$ consumers, given that she can only observe their purchased bundles at posted prices, i.e., revealed preferences. We study both social welfare and profit maximization with revealed preferences. Although social welfare maximization is a seemingly non-convex optimization problem in prices, we show that (i) it can be reduced to a dual convex optimization problem in prices, and (ii) the revealed preferences can be interpreted as supergradients of the concave conjugate of valuation, with which subgradients of the dual function can be computed. We thereby obtain a simple subgradient-based algorithm for strongly concave valuations and convex cost, with query complexity $O(m^2/\epsilon^2)$, where $\epsilon$ is the additive difference between the social welfare induced by our algorithm and the optimum social welfare. We also study social welfare maximization under the online setting, specifically the random permutation model, where consumers arrive one-by-one in a random order. For the case where consumer valuations can be arbitrary continuous functions, we propose a price posting mechanism that achieves an expected social welfare up to an additive factor of $O(\sqrt{mn})$ from the maximum social welfare. Finally, for profit maximization (which may be non-convex in simple cases), we give nearly matching upper and lower bounds on the query complexity for separable valuations and cost (i.e., each good can be treated independently)