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Bob is a decision-maker facing a set of outcomes X = {A new car, Caribbean cruise, Superbowl tickets}. Bob's choice rule for different menus or

Bob is a decision-maker facing a set of outcomesX= {A new car, Caribbean cruise, Superbowl tickets}. Bob'schoice rulefor different menus orchoice problemsspecifies the following:

  • From the choice problemA1,2 ={A new car, Caribbean cruise},

the choice rule specifiesC(A1,2) ={Caribbean cruise}

  • From the choice problemA1,3 = {A new car, Superbowl tickets},

the choice rule specifiesC(A1,3) ={A new car}

  • From the choice problemA 2,3 ={Caribbean cruise, Superbowl tickets},

the choice rule specifiesC(A2,3) = C(A2,3)={Caribbean cruise, Superbowl tickets}

  1. Explain why Bob's choices are not consistent with theWeak Axiom of Revealed Preference (WARP).
  2. Write down Bob's preference relation based on the choice rule information given above.
  3. Explain why the preference relation corresponding to Bob's stated choice rule is notrational.

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