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|CONSUMER PREFERENCES, BUDGET CONSTRAINTS, AND CONSUMPTION CHOICES
|This paper discusses consumer preferences and choices from a traditional perspective to illuminate some of the crucial issues relevant to consumer theory and service science. As revealed in the theory of revealed preference, the information which is obtained from the observed consumption choices by consumers may be used by firms in providing and pricing commodities of various types to promote managerial outcomes. The property of transitivity in a preference order relation would facilitate the establishment of the property of coherence in a
choice function, while the coherence in a consumer’s choice function may not guarantee that her preferences would possess the property of transitivity in a preference order relation. A hypothetical example presented in this paper demonstrates the duality approach to consumer choice analysis by showing the equivalence between utility maximization and expenditure minimization in consumer choice and suggests the necessity of further research on the unaddressed psychological process of individual or group consumption choices made by consumers within a global context.
|Review of Global Management and Service Science, 3: 15-23
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