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The Law of Demand and Risk Aversion

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  • John Quah

    ()
    (St Hugh's College, Oxford)

Abstract

This note proposes a necessary and sufficient condition on a preference to guarantee that the demand function it generates satisfies the law of demand. It shows that the law of demand may be succinctly characterized by differences in an agent's level of risk aversion when she is confronted with different lotteries composed of commodity bundles.

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File URL: http://www.nuff.ox.ac.uk/economics/papers/2002/w3/hlp7.pdf
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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2002-W3.

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Length: 16 pages
Date of creation: 10 Jan 2002
Date of revision:
Handle: RePEc:nuf:econwp:0203

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Web page: http://www.nuff.ox.ac.uk/economics/

Related research

Keywords: law of demand; monotonicity; preference; risk aversion;

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References

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  1. John Quah, 1999. "The Weak Axiom and Comparative Statics," Economics Series Working Papers 1999-W15, University of Oxford, Department of Economics.
  2. Kannai, Yakar, 1989. "A characterization of monotone individual demand functions," Journal of Mathematical Economics, Elsevier, vol. 18(1), pages 87-94, February.
  3. Bettzuge, Marc Oliver, 1998. "An extension of a theorem by Mitjushin and Polterovich to incomplete markets," Journal of Mathematical Economics, Elsevier, vol. 30(3), pages 285-300, October.
  4. Magill, Michael & Shafer, Wayne, 1991. "Incomplete markets," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 30, pages 1523-1614 Elsevier.
  5. Debreu, Gerard, 1976. "Least concave utility functions," Journal of Mathematical Economics, Elsevier, vol. 3(2), pages 121-129, July.
  6. Polterovich, Victor & Mityushin, Leonid, 1978. "Criteria for Monotonicity of Demand Functions," MPRA Paper 20097, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Chambers, Christopher P. & Echenique, Federico & Shmaya, Eran, 2007. "On behavioral complementarity and its implications," Working Papers 1270, California Institute of Technology, Division of the Humanities and Social Sciences.
  2. John Quah, 2004. "The aggregate weak axiom in a financial economy through dominant substitution effects," Economics Papers 2004-W18, Economics Group, Nuffield College, University of Oxford.
  3. Michael Jerison & John K.-H. Quah, 2006. "Law of Demand," Discussion Papers 06-07, University at Albany, SUNY, Department of Economics.
  4. Quah, John K. -H., 2003. "Market demand and comparative statics when goods are normal," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 317-333, June.
  5. Yakar Kannai & Larry Selden, 2014. "Violation of the Law of Demand," Economic Theory, Springer, vol. 55(1), pages 1-28, January.
  6. Peter Moffatt & Keith Moffatt, 2011. "Mirror utility functions and reflexion properties of various classes of goods," University of East Anglia Applied and Financial Economics Working Paper Series 031, School of Economics, University of East Anglia, Norwich, UK..
  7. Ivan Boldyrev & Olessia Kirtchik, 2013. "General equilibrium theory behind the iron curtain: the case of Victor Polterovich," HSE Working papers WP BRP 14/HUM/2013, National Research University Higher School of Economics.

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