The Law of Demand and Risk Aversion
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.
|Date of creation:||10 Jan 2002|
|Date of revision:|
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"The Theory of General Economic Equilibrium,"
Cambridge University Press, number 9780521265140, June.
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