Revealed Preference

Revealed preference is an economic concept that infers people's choices and their true preferences based on their actual purchasing decisions rather than what they say they want. When someone chooses one option over another, it reveals their underlying preferences. For example, if you pick apples over oranges repeatedly, it suggests you prefer apples. This approach helps economists understand people's preferences indirectly by analyzing observable behavior, rather than relying solely on self-reported opinions, which might be biased or inaccurate. It’s a way of understanding what people value most through the choices they make in real-life situations.