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Behavioral Heterogeneity in Large Economies

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Author Info
Gael Giraud
Isabelle Maret
Abstract

Grandmont\'s ([14]) notion of behavioral heterogeneity is reformulated in a non parametric set-up such that the space of budget share functions admits a ``uniform\'\' probability distribution. If the population is distributed according to this measure, the aggregate budget share function is constant with respect to changes in prices and income. This exact insensitivity of the market budget share function is known to imply uniqueness and global stability of any competitive equilibrium. Here, it is not explained by any insensitivity property at the micro-economic level, but rather by a perfect \'balancing effect\'. Eventually, it is proved that the insensitivity property holds approximately for a finite population sufficiently close to, but distinct from, the perfectly heterogenous one.

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Paper provided by Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg in its series Working Papers of BETA with number 2001-08.

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Date of creation: 2001
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Handle: RePEc:ulp:sbbeta:2001-08

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Related research
Keywords: Aggregation of demand; behavioral heterogeneity; large economy; Law of Demand; Insensitivity of market budget shares.;

Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D30 - Microeconomics - - Distribution - - - General
D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  7. de Villemur, E.B., 1998. "Heterogeneity and Stability: Variations on Scarf's Processes," Economics Working Papers eco98/38, European University Institute.
  8. Mertens, J.-F., 1988. "Stable equilibria - a reformulation," CORE Discussion Papers 1988038, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  10. CALVET, Laurent & GRANDMONT, Jean-Michel & LEMAIRE, Isabelle, 1998. "Heterogeneous probabilities in complete asset markets," CORE Discussion Papers 1998019, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  12. P. A. Chiappori & I. Ekeland, 1999. "Aggregation and Market Demand: An Exterior Differential Calculus Viewpoint," Econometrica, Econometric Society, vol. 67(6), pages 1435-1458, November.
  13. POLEMARCHAKIS, Heracles M. & CHIAPPORI, P. A. & KUBLER, F. & EKELAND, I., 2000. "The identification of preferences from equilibrium prices under uncertainty," Les Cahiers de Recherche 689, HEC Paris.
    Other versions:
  14. Hildenbrand, K., 1998. "On J.M. Grandmont's Modelling of Behavioral Heterogeneity," Discussion Paper Serie A 580, University of Bonn, Germany. [Downloadable!]
  15. Mas-Colell, Andreu & Neuefeind, Wilhelm, 1977. "Some Generic Properties of Aggregate Excess Demand and an Application," Econometrica, Econometric Society, vol. 45(3), pages 591-99, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gael Giraud & John Quah, 2002. "Heterotic Models of Aggregate Demand," Economics Papers 2002-W18, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
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