Lars P. Syll — Foundations of Paul Samuelson’s Revealed Preference Theory

Wonkish but important in taking down the foundations on which the neoclassical assumption of equilibrium based, positing a representational rational agent using utility maximization as the driver. The problem lies in defining "utility" in a way that provides a connection between the theory and the world it purports to explain through a general description. The problem with "utility" is that it is subjective, hence, non-descriptive. Samuelson tried to overcome this bias using revealed preference, which is behavioral, hence, can be described, e.g., through indifference curves. The post is why this approach is also deficient. Neoclassical economics presumes a downward sloping demand curve, and this cannot be shown convincingly using revealed preference as Paul Samuelson had attempted.

Lars P. Syll
Foundations of Paul Samuelson’s Revealed Preference Theory