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On behavioral complementarity and its implications

Chambers, Christopher P. and Echenique, Federico and Shmaya, Eran (2007) On behavioral complementarity and its implications. Social Science Working Paper, 1270. California Institute of Technology , Pasadena, CA. (Unpublished) http://resolver.caltech.edu/CaltechAUTHORS:20170728-161413630

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Abstract

We study the behavioral definition of complementary goods: if the price of one good increases, demand for a complementary good must decrease. We obtain its full implications for observable demand behavior (its testable implications), and for the consumer’s underlying preferences. We characterize those data sets which can be generated by rational preferences exhibiting complementarities. In a model in which income results from selling an endowment (as in general equilibrium models of exchange economies), the notion is surprisingly strong and is essentially equivalent to Leontief preferences. In the model of nominal income, the notion describes a class of preferences whose extreme cases are Leontief and Cobb-Douglas respectively.


Item Type:Report or Paper (Working Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20101004-113353153Related ItemPublished Version
Additional Information:Published as Chambers, C.P., Echenique, F., & Shmaya, E. (2010). On behavioral complementarity and its implications. Journal of Economic Theory, 145(6), 2332-2355.
Group:Social Science Working Papers
Subject Keywords:Gross Complements, Refutability, Afriat’s model, Expenditure Data, Leontief preferences
Classification Code:JEL: D11, D12
Record Number:CaltechAUTHORS:20170728-161413630
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20170728-161413630
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79570
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:01 Aug 2017 23:24
Last Modified:01 Aug 2017 23:24

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