Strong Axiom of Revealed Preference (SARP)

WARP is one implication of choices that are consistent with a utility function, but there are other implications as

well. Another implaication, called the Strong Axiom of Revealed Preference (SARP) is closely related to WARP.

If x 1 R0 x 2, x 2 R0 x 3, and so on until x n - 1 R0 x n, then we say that x 1 is revealed preferred to x n. This is written as x

1
R x n.

The primary difference between SARP and WARP is that SARP not only rules out two choices that are both

directly revealed preferred to one another, but it also rules out chains of choices that ultimately lead to two

choices that are each revealed preferred to one another.

SARP If xi R xj and xi is not equal to xj, then it is not possible to have xj R xi.

In the example below, there are three different prices, and three choices. For each pair of prices and choices,

there is no violation of WARP, but there is a cycle that violates SARP.

Example: The first price and associated consumption choices are p1 = (2, 3, 3) and x1 = (3, 1, 7). The second

price and choices are p2 = (3, 2, 3) and x2 = (7, 3, 1), and the third pair are p3 = (3, 3, 2) and x3 = (1, 7, 3).

None of these price and consumption pairs violate WARP. This can be verified directly by observing that for the

price p1, x2 is available but x3 is not available. Since x1 is not available at the price p2, there is no violation of

WARP that involves x1.

When the price is p2, the consumption level x3 is affordable, but when the price is p3, x2 is not available, so there is

no violation of WARP that involves x2.

The problem with this set of choices is with the cycle x1 R0 x2, x2 R0 x3, and x3 R0 x1. The combination of the first

two of these show that x1 R x3, and from the third, x3 R x1, so SARP is violated but WARP is not.

This example leads to a problem similar to the example of inconsistent choices, and the demonstration that this

example is inconsistent with the existence of a utility function that represents choices is similar.

WARP Completeness, Antisymmetry

GARP Transitivity, Completeness
SARP Transitivity, Completeness, Antisymmetry