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Psychological Thresholds, Demand and Price Rigidity

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  • Drakopoulos, S A

Abstract

The starting point of this paper is the idea of threshold behavior, which has considerable support in psychology but has been neglected by economists. The implications of having a consumer theory that puts emphasis on threshold behavior towards prices and quantities are examined. It is shown that a threshold-based demand curve can be derived from a hierarchical approach to consumer behavior and also from a customs- or habits-oriented response to price by the consumer. These threshold-based demand curves can provide an additional explanation for price rigidity in the product market. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Drakopoulos, S A, 1992. "Psychological Thresholds, Demand and Price Rigidity," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(2), pages 152-168, June.
    • Handle: RePEc:bla:manch2:v:60:y:1992:i:2:p:152-68
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    Cited by:

    1. Drakopoulos, Stavros A., 2003. "Choice Theoretical Foundations of Union Utility Functions Involving Discontinuities," MPRA Paper 90229, University Library of Munich, Germany.
    2. John A. Cotsomitis, 2022. "The Learning Economy Regime," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 687-722, March.
    3. Drakopoulos, Stavros A., 1994. "Trade Union Priorities and Wage Rigidity," MPRA Paper 35791, University Library of Munich, Germany.
    4. Stavros, Drakopoulos, 1992. "A Behavioural Approach to Kinked Demand Curves," MPRA Paper 90373, University Library of Munich, Germany.
    5. Drakopoulos, Stavros A., 2008. "The Concept Of Comparison Income: An Historical Perspective," MPRA Paper 8713, University Library of Munich, Germany.
    6. Biondi, Beatrice & Cornelsen, Laura & Mazzocchi, Mario & Smith, Richard, 2020. "Between preferences and references: Asymmetric price elasticities and the simulation of fiscal policies," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 108-128.
    7. Stavros Drakopoulos, 2008. "The paradox of happiness: towards an alternative explanation," Journal of Happiness Studies, Springer, vol. 9(2), pages 303-315, June.
    8. S. G. Li & Y. Q. Zhang & Z. X. Yu & F. Liu, 2021. "Economical user-generated content (UGC) marketing for online stores based on a fine-grained joint model of the consumer purchase decision process," Electronic Commerce Research, Springer, vol. 21(4), pages 1083-1112, December.
    9. Nachiketa Chattopadhyay & Amita Majumder & Dipankor Coondoo, 2009. "Demand Threshold, Zero Expenditure And Hierarchical Model Of Consumer Demand," Metroeconomica, Wiley Blackwell, vol. 60(1), pages 91-118, February.
    10. Lavoie, Marc, 2004. "Post Keynesian consumer theory: Potential synergies with consumer research and economic psychology," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 639-649, October.
    11. Drakopoulos, S. A. & Theodossiou, I., 1997. "Job satisfaction and target earnings," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 693-704, November.

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