Some Thoughts on the Principle of Revealed Preference

The Principle of Revealed Preference is a methodological paradigm whereby observed choices of an individual are used only to reveal her mental preferences. We make three statements about the way that economists view this principle as a modeling guide. First, we argue that there is no escape from including mental entities such as mental preferences in addition to observed choices in economic models. Second, we assert that economists should be looking at models in which an observed choice leads to conclusions other than that the chosen element is always mentally preferred to the other elements in the choice problem. Finally, we claim that there is room for models of choice in which the observable information about a choice situation is richer than just the set of available alternatives and the alternative chosen.