<p>We can obtain the result that Indiference Sets are <em>not</em> singletons, i.e. that consumption bundles that are equivalent under the preference relation <em>must</em> exist, by using a Consumption Set $X$ defined over $\mathbb R_+^n$, i.e. over <em>real</em> vectors, together with the property of Continuity of preferences (alternative-weaker prerequisites may exist though).  </p>

<p>An equivalent way to state the property of Continuity of preferences (see for example Mas-Collel et al, ch 3.C), is that $\forall x \in X$ the upper contour set $UCS$ and the lower contour set $LCS$ are both <em>closed</em>, i.e they include their boundaries. The contour sets are sets that include consumptions bundles "at least as preferred as $x$" (upper) and "at most as preferred as $x$" (lower). In order for them to "include" their boundary", <em>a boundary must exist in the first place</em>. But their boundary is the Indifference Set, the set containing all bundles as preferred as $x$.  </p>

<p>So your question essentially boils down to <strong>Is it possible that the boundary of the upper or lower contour sets of $x$, sets that are defined over real vectors, is a single point?</strong></p>

<p>I believe that envisioning this in two-dimensions will show that it is impossible, but let's prove it.</p>

<p><em>Ad absurdum</em>, assume that this holds for some $x \in X$. Then for <em>any</em> other consumption bundle in $X$, say $x'$, we will have either $x'&gt;_{pr} x$ or $x'&lt;_{pr} x$. In other words, any other point in $X$ will belong either in $UCS_x$ or in $LCS_x$, <em>but not in both</em>.  </p>

<p>So consider two such points , $x''&gt;_{pr}x&gt;_{pr}x'$. Assume that $x'=\{\mathbf y_{(n-1)}, y_n\}$, $x''=\{\mathbf y_{(n-1)}, y_n+\epsilon(k)\}$, i.e. that they differ in only one of the goods in Goods Space, $\epsilon(k)&gt;0$.  </p>

<p>Transform now these two points into two <em>sequences</em> of points, $\{x''_k\}$ and $\{x'_k\}$, indexed by $k= 1,...$ and by constructing the sequence $\{\epsilon_k\}$ such that $\{\epsilon_k\} &gt;0\; \forall k$ but also $\lim_{k\rightarrow \infty} \epsilon_k = 0$. The consumption space as defined permits these constructions.  We note of course that $\{x'_k\}$ is a constant sequence since its value does not change  as $k$ changes, but that's perfectly legal. </p>

<p>Consider now the sequence of pairs, for each $k$, $\{(x''_k, x'_k)\}_{k=1}^{\infty}$, and it holds that</p>

<p>$$ x''_k &gt;_{pr} x'_k\;\;\;\forall k  \tag{1}$$
$$\lim_{k\rightarrow \infty} x''_k = x'$$
$$\lim_{k\rightarrow \infty} x'_k = x'$$</p>

<p>Under Continuity of preferences we should obtain
$$ (1) \implies \lim_{k\rightarrow \infty} x'' &gt;_{pr} \lim_{k\rightarrow \infty} x'$$
but this is obviously not possible since these limits are identical.
So by assuming that there exists an $x$ in the Consumption Set to which no other bundle is equivalent in terms of the preference relation, we have violated the Continuity property.  </p>

<p>Alternatively, since the bundles are defined over real vectors, and both $UCS$ and $LCS$ are closed due to the Continuity property, then every Cauchy sequence in each of them that converges has its limit <em>in</em> them. So the sequence $\{x''_k\}$ has its limit in $UCS_x$, while the sequence $\{x'_k\}$ must have its limit in $LCS_x$. But this limit is the same as shown above, and equal to $x'$. But the only common point of these two sets is $x$. So it must be the case that $x'=x$. But this cannot hold since we have started by assuming $x&gt;_{pr} x'$.  </p>

<p>An example where indifference sets are singletons is the case of <em>Lexicographic Preferences</em>. And Lexicographic Preferences are not continuous.</p>

CC BY-SA 3.0
2015-04-07T04:19:54.773Z
So are you saying the Continuity axiom implies, for a given single point in the Consumption set, there must exist other points (ie bundles) for which the consumer is indifferent when compared with our single point? In other words, assuming no other equivalent bundle exists means leads to a contradiction. And hence there must  exist other bundles equivalent to the given bundle we have chosen.
Stan Shunpike
CC BY-SA 3.0
2015-04-07T04:23:30.780Z
Yes that's the essence of the thing. Continuity implies that Indifference Sets are not singletons.
Alecos Papadopoulos
CC BY-SA 3.0
2015-04-08T23:25:45.177Z
But if the in the Lexicographic case case continuity doesn't apply and the indifference sets are singletons, does that mean the graph of an indifference curve is a single point and a set of indifference curves a lattice?
Stan Shunpike
CC BY-SA 3.0
2015-04-08T23:53:07.213Z
Like I'm getting confused because I'm not used to thinking about manifolds where the space we are working with isn't continuous. So I am having trouble imagining how a curve would be represented in say 2 dimensions for lexicographic preferences. Furthermore, I asked my professor about how curves work and he didn't really give a satisfactory explanation as to whether lexicographic preference can still be defined over $\Bbb{R}^n$.
Stan Shunpike
CC BY-SA 3.0
2015-04-09T00:15:04.367Z
@StanShunpike They are indeed singletons Stan, when preferences are lexicographic. Try a simple diagram with two goods and you will see that no point in the plane can represent the exact same utility as any other. In other words, _there are no curves here_.
Alecos Papadopoulos
CC BY-SA 3.0
2015-04-09T00:16:24.003Z
Okay. Fine. That makes sense. I was just trying to make sure it was a simple as that. Thanks for clarifying.
Stan Shunpike
CC BY-SA 3.0
2015-04-09T00:19:07.407Z
You're welcome. Keep up the good questions.
Alecos Papadopoulos
CC BY-SA 3.0
2015-04-09T22:40:23.850Z
I want to learn more about Upper Contour sets and related topics. Is this real analysis? I have Principles of Mathematical Analysis by Walter Rutin but I personally haven't felt satisfied by it. For example, he doesn't use the term upper contour set anywhere. Do you have a recommendation?
Stan Shunpike
CC BY-SA 3.0
2015-04-09T22:54:37.240Z
"Convex Optimization" by Boyd and Vandenberghe, legally freely downloadable here, http://stanford.edu/~boyd/cvxbook/ , may give you a more abstract mathematical picture but still connected to optimization so as to relate back to economics.
Alecos Papadopoulos
CC BY-SA 3.0
2015-04-10T02:42:34.570Z
Nice! That looks awesome. The theory part picks up up right where my professor's notes are at.
Stan Shunpike
CC BY-SA 3.0
2015-04-07T03:56:48.913Z
2015-04-07T04:08:12.307Z
2015-04-07T04:08:12.307Z
Alecos Papadopoulos
<p>In my professors lecture notes (it's more like a book), he states four properties of preferences relations:</p>

<ul>
<li>monotonicity</li>
<li>transitivity </li>
<li>continuity</li>
<li>completeness </li>
</ul>

<p>He then goes on to discuss utility levels and indifference curves. He describes indifference curves as level sets and that consumption bundles that the consumer is indifferent between lie on the same indifference curve. </p>

<p><strong>My Question:</strong></p>

<p>For a given set of consumption bundles, how do we know there are <em>any</em> bundles that the consumer is indifferent between? I don't see how we can define indifference curves without knowing that. </p>

<consumer-theory>
For a given set of consumption bundles, how do we know there are bundles that the consumer is indifferent between?
Stan Shunpike
# For a given set of consumption bundles, how do we know there are bundles that the consumer is indifferent between?

(Asked by: username_0 on 2015-04-06)

In my professors lecture notes (it's more like a book), he states four properties of preferences relations:

* monotonicity
* transitivity
* continuity
* completeness

He then goes on to discuss utility levels and indifference curves. He describes indifference curves as level sets and that consumption bundles that the consumer is indifferent between lie on the same indifference curve.

**My Question:**

For a given set of consumption bundles, how do we know there are *any* bundles that the consumer is indifferent between? I don't see how we can define indifference curves without knowing that.

**Tags:** consumer-theory


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## 1 answers

### Answer by username_1 on 2015-04-07. Score: 3 | Accepted answer

We can obtain the result that Indiference Sets are *not* singletons, i.e. that consumption bundles that are equivalent under the preference relation *must* exist, by using a Consumption Set $X$ defined over $\mathbb R\_+^n$, i.e. over *real* vectors, together with the property of Continuity of preferences (alternative-weaker prerequisites may exist though).

An equivalent way to state the property of Continuity of preferences (see for example Mas-Collel et al, ch 3.C), is that $\forall x \in X$ the upper contour set $UCS$ and the lower contour set $LCS$ are both *closed*, i.e they include their boundaries. The contour sets are sets that include consumptions bundles "at least as preferred as $x$" (upper) and "at most as preferred as $x$" (lower). In order for them to "include" their boundary", *a boundary must exist in the first place*. But their boundary is the Indifference Set, the set containing all bundles as preferred as $x$.

So your question essentially boils down to **Is it possible that the boundary of the upper or lower contour sets of $x$, sets that are defined over real vectors, is a single point?**

I believe that envisioning this in two-dimensions will show that it is impossible, but let's prove it.

*Ad absurdum*, assume that this holds for some $x \in X$. Then for *any* other consumption bundle in $X$, say $x'$, we will have either $x'>\_{pr} x$ or $x'<\_{pr} x$. In other words, any other point in $X$ will belong either in $UCS\_x$ or in $LCS\_x$, *but not in both*.

So consider two such points , $x''>\_{pr}x>\_{pr}x'$. Assume that $x'=\{\mathbf y\_{(n-1)}, y\_n\}$, $x''=\{\mathbf y\_{(n-1)}, y\_n+\epsilon(k)\}$, i.e. that they differ in only one of the goods in Goods Space, $\epsilon(k)>0$.

Transform now these two points into two *sequences* of points, $\{x''\_k\}$ and $\{x'\_k\}$, indexed by $k= 1,...$ and by constructing the sequence $\{\epsilon\_k\}$ such that $\{\epsilon\_k\} >0\; \forall k$ but also $\lim\_{k\rightarrow \infty} \epsilon\_k = 0$. The consumption space as defined permits these constructions. We note of course that $\{x'\_k\}$ is a constant sequence since its value does not change as $k$ changes, but that's perfectly legal.

Consider now the sequence of pairs, for each $k$, $\{(x''\_k, x'\_k)\}\_{k=1}^{\infty}$, and it holds that

$$ x''\_k >\_{pr} x'\_k\;\;\;\forall k \tag{1}$$
$$\lim\_{k\rightarrow \infty} x''\_k = x'$$
$$\lim\_{k\rightarrow \infty} x'\_k = x'$$

Under Continuity of preferences we should obtain
$$ (1) \implies \lim\_{k\rightarrow \infty} x'' >\_{pr} \lim\_{k\rightarrow \infty} x'$$
but this is obviously not possible since these limits are identical.
So by assuming that there exists an $x$ in the Consumption Set to which no other bundle is equivalent in terms of the preference relation, we have violated the Continuity property.

Alternatively, since the bundles are defined over real vectors, and both $UCS$ and $LCS$ are closed due to the Continuity property, then every Cauchy sequence in each of them that converges has its limit *in* them. So the sequence $\{x''\_k\}$ has its limit in $UCS\_x$, while the sequence $\{x'\_k\}$ must have its limit in $LCS\_x$. But this limit is the same as shown above, and equal to $x'$. But the only common point of these two sets is $x$. So it must be the case that $x'=x$. But this cannot hold since we have started by assuming $x>\_{pr} x'$.

An example where indifference sets are singletons is the case of *Lexicographic Preferences*. And Lexicographic Preferences are not continuous.

> **Comments:**
> **username_0**: So are you saying the Continuity axiom implies, for a given single point in the Consumption set, there must exist other points (ie bundles) for which the consumer is indifferent when compared with our single point? In other words, assuming no other equivalent bundle exists means leads to a contradiction. And hence there must  exist other bundles equivalent to the given bundle we have chosen.  
> **username_1**: Yes that's the essence of the thing. Continuity implies that Indifference Sets are not singletons.  
> **username_0**: But if the in the Lexicographic case case continuity doesn't apply and the indifference sets are singletons, does that mean the graph of an indifference curve is a single point and a set of indifference curves a lattice?  
> **username_0**: Like I'm getting confused because I'm not used to thinking about manifolds where the space we are working with isn't continuous. So I am having trouble imagining how a curve would be represented in say 2 dimensions for lexicographic preferences. Furthermore, I asked my professor about how curves work and he didn't really give a satisfactory explanation as to whether lexicographic preference can still be defined over $\Bbb{R}^n$.  
> **username_1**: @username_0 They are indeed singletons username_0, when preferences are lexicographic. Try a simple diagram with two goods and you will see that no point in the plane can represent the exact same utility as any other. In other words, _there are no curves here_.  
> **username_0**: Okay. Fine. That makes sense. I was just trying to make sure it was a simple as that. Thanks for clarifying.  
> **username_1**: You're welcome. Keep up the good questions.  
> **username_0**: I want to learn more about Upper Contour sets and related topics. Is this real analysis? I have Principles of Mathematical Analysis by Walter Rutin but I personally haven't felt satisfied by it. For example, he doesn't use the term upper contour set anywhere. Do you have a recommendation?  
> **username_1**: "Convex Optimization" by Boyd and Vandenberghe, legally freely downloadable here, http://stanford.edu/~boyd/cvxbook/ , may give you a more abstract mathematical picture but still connected to optimization so as to relate back to economics.  
> **username_0**: Nice! That looks awesome. The theory part picks up up right where my professor's notes are at.  

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