Readers Question: what axioms underlie the theory of consumer behaviour? How reasonable are they? I have the axioms: completeness, transitivity, continuity, non-satiation and convexity. but we have never been taught about how reasonable they are and I can’t find any info anywhere! please help
It is an interesting question. I am not really qualified to give a good answer as I am not familiar with some of the terms you mention. However, I will look at the issue from a more general perspective.
If a consumer prefers A to B and also prefers B to C. Then, it follows a rational consumer should prefer A to C.
E.g. you prefer Starbucks to Costa Coffee and you prefer Costa Coffee to McDonald’s then you should prefer Starbucks to going to McDonald’s.
Are there consumers who might, given the above, still prefer McDonald’s to Starbucks? It is pretty unlikely, but, consumers can always behave on a whim. It is not impossible.
Generally, consumption creates diminishing marginal utility. E.g. the 10th chocolate bar gives less marginal utility than the 1st chocolate bar. Therefore indifference curves will be convex.
However, it is possible some goods may have increasing marginal utility.
For example, one potato seed is of little utility because there is little to be gained by growing one potato. However, if you get 20 potato seeds, then it becomes worthwhile to prepare the ground and plant potatoes.
If you prefer A to B today; then, in theory, you should prefer A to B tomorrow. However, we know that this assumption often doesn’t occur in the real world. Today we prefer fried eggs for breakfast. But, in the future we may value a healthy diet more, therefore next week we may prefer muesli to fried eggs.