Preference Axioms

The preference axioms are core principles that describe how a rational consumer makes choices. They underpin the theory of consumer behavior and include the following:

• Completeness Axiom. A consumer can always compare any two bundles - A and B - and determine whether they prefer A to B, B to A, or are indifferent between them.
• Transitivity Axiom. If a consumer prefers bundle A to bundle B, and bundle B to bundle C, then they must also prefer bundle A to bundle C. This ensures consistency in preferences.
• Continuity Axiom. For any bundle, there is always a nearby bundle - differing by only small amounts of goods - that the consumer considers equally desirable. This guarantees smooth preference relations.
• Non-Satiation Axiom. If bundle A contains more of at least one good than bundle B, and no less of any other, the consumer will strictly prefer A to B. Put simply: more is always better, all else being equal. This axiom justifies that indifference curves farther from the origin represent higher utility levels.
• Convexity Axiom. Given two bundles A and B, the consumer will generally prefer a mix of the two - a bundle C that lies between them - over either extreme. This reflects a taste for variety and results in the convex shape of indifference curves.