Focusing the Search for Giffen Behavior.

A recent paper by Otis Gilley and Gordon Karels (1991) showed that Giffen behavior can result from a rationing constraint that provides a second, lower bound to consumption. This model provides a far wider set of possibilities for uncovering Giffen behavior empirically than simply among the poor with limited consumption choices among a few staple items. Giffen behavior of this type can equally well result from the interaction of two binding upper constraints to the consumer's choice set. This is demonstrated with a consumer who experiences local satiation, the antithesis of the usual setting where Giffen goods are thought possible. Copyright 1994 by Oxford University Press.