What is the principle of revealed preference ?

The principle of revealed preference states that an individual’s preferences can be inferred from their actual behavior in the market. In economics, this principle is used to determine what goods and services people prefer and are willing to purchase. It is also used to identify how preferences change as circumstances and prices fluctuate. The idea behind this economic principle is that people naturally prefer to spend their money in the most efficient way, and this behavior can be observed in the decisions they make in the market. Revealed preference theory suggests that preferences are revealed in the choices individuals make when presented with different options, which can then be used to inform the decision-making process.