Additive increase/multiplicative decrease: Difference between revisions

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In economics, an agent's preferences are said to be '''weakly monotonic''' if, given a consumption bundle <math>x</math>, the agent prefers all consumption bundles <math>y</math>  that have more of every good. That is, <math>y \gg x</math> implies <math>y\succ x</math>. An agent's preferences are said to be '''strongly monotonic''' if, given a consumption bundle <math>x</math>, the agent prefers all consumption bundles <math>y</math> that have more of at least one good, and not less in any other good. That is, <math>y\geq x</math> and <math>y\neq x</math> imply <math>y\succ x</math>.
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This definition defines monotonic increasing preferences. Monotonic decreasing preferences can often be defined to be compatible with this definition. For instance, an agent's preferences for pollution may be monotonic decreasing (less pollution is better). In this case, the agent's preferences for lack of pollution are monotonic increasing.
 
Much of consumer theory relies on a weaker assumption, [[local nonsatiation]].
 
An example of preferences which are weakly monotonic but not strongly monotonic are those represented by a [[Leontief Utilities|Leontief utility function]].
 
==References==
* [[Andreu Mas-Colell|Mas-Colell, Andreu]], Whinston, Michael D., Green, Jerry R. ''Microeconomic Theory.'' Oxford University Press. 1995.
 
==See also==
*[[Monotonic function#Monotonicity in calculus and analysis]]
*[[Strict]]
 
[[Category:Microeconomics]]
[[Category:Consumer theory]]
 
{{microeconomics-stub}}

Latest revision as of 04:55, 29 April 2014

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