On behavioral complementarity and its implications
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. The class of preferences that generate demand complements has Leontief and Cobb-Douglas as its as extreme members.
| Year of publication: |
2010
|
|---|---|
| Authors: | Chambers, Christopher P. ; Echenique, Federico ; Shmaya, Eran |
| Published in: |
Journal of Economic Theory. - Elsevier, ISSN 0022-0531. - Vol. 145.2010, 6, p. 2332-2355
|
| Publisher: |
Elsevier |
| Keywords: | Revealed preference Gross complements Demand theory |
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