Axioms Summary

Completeness: Make Comparisons, Evaluate preferences. If A~B then B~A. If A~B

and B>A, then not Complete. It rules out horizontal or vertical indifference curves.
Transitivity: Leads to Consistency. If A>= B and B>= C then A>= C.
It rules out the intersection of indifference curves and cycle indifference curves
(A>=B>=C>=A, is not transitive).

Continuity: it rules out Sudden preference reversals and Open Areas in the
indifference sets. It doesn’t rule out kinks or other kinds of continuous but impolite
behavior.
Differentiability: Ensures indifference curves are Smooth (or rules out kinks) as
well as Continuous.

Local Non-Satiation: it rules out the possibility of having Zones of indifference. It

doesn’t rule out the possibility that the preferred alternative may involve less of some
or all commodities. It doesn’t imply that giving the consumer More of everything
makes him/ her better off. It rules out horizontal or vertical indifference curves.
Strict Monotonicity: More is preferred to Less. It rules out the possibility that the
indifference sets bend upward or contain positively sloped segments.
• Strictly Monotonicity axiom implies Local Non-Satiation axiom, so, if
preferences satisfy Strict Monotonicity, they automatically satisfy Local Non-
Satiation axiom. In another word, every strictly monotonic preference is local non
satiated but not vice versa. So, Strict Monotonicity axiom has the same effects
on the structure of indifference as local non-satiation, meaning that Strict
Monotonicity rules out the possibility of having zones of each indifference (or
Thick indifference curved) as well.
❖ Weak non satiation =local non satiation.
❖ Strong non satiation= Monotonicity.

1
Convexity & Strict Convexity: they rule out Concave to the origin segments in the
indifference sets.
Convexity: requires that the MRS to be either constant or diminishing, so, It is not
sufficient to have "The principle of diminishing MRS in consumption". It leads to
Quasiconcave utility function.
Strict Convexity: requires that the MRS to be Strictly diminishing, so, It is required
to have "The principle of diminishing MRS in consumption". It leads to Strict
quasiconcave utility function. It doesn’t follow from completeness and transitivity
axioms.
❖ Weak balance in consumption= weak convex.
❖ Strong balance in consumption= Strict convex.