The Mechanism of Giffen Behaviour

The law of demand might have no exception and the Giffen behavior should be one of the standard forms of the law. According to the new attribute theory and semi-empirical simulation method, Giffen behavior is verified in a general equilibrium framework using the data of food consumption in rural China. The superior food and the wealthy households with high preference for taste have higher possibility than the inferior food and low income households in exhibiting Giffen property. Therefore, to find empirical Giffen behavior, we should focus on the superior food and wealthy households with high preference for taste.