The Law of Demand and Risk Aversion
AbstractThis 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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Bibliographic InfoPaper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2002-W3.
Length: 16 pages
Date of creation: 10 Jan 2002
Date of revision:
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Web page: http://www.nuff.ox.ac.uk/economics/
law of demand; monotonicity; preference; risk aversion;
Other versions of this item:
- NEP-ALL-2002-03-04 (All new papers)
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