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Self-Dual Preferences

Ryuzo Sato

Abstract

Recent papers by Houthakker [3 and 4], Samuelson [8 and 9], Sir John Hicks [2], and others deal with the question of the existence of a nontrivial preference ordering which exhibits the same mathematical properties in terms of both the direct and indirect utility functions. It is shown that homogeneity and separability are compatible with both the direct and indirect utility functions,but that direct and indirect additivity is consistent with only limited classes of utility functions. Samuelson has raised the question of whether there exists a nontrivial self-dual preference ordering which requires more stringent conditions than homogeneity and separability. By a self-dual preference is meant a preference ordering such that the direct utility function is exactly identical with the corresponding indirect utility function The purpose of this paper is to present a complete solution to the problem of self-duality. First, we elaborate on the necessary and sufficient conditions for an "exactly" or "strongly" self-dual utility function (in Samuelson's sense). Then, using some well-known concepts of the continuous group theory of transformations, we study the case of "weakly" self-dual preference orderings and give a precise formulation of the concept of the "same" mathematical form. Some special classes of self-dual preferences are subjected to detailed analysis.