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 agents level of risk aversion when she is confronted with different lotteries composed of commodity bundles.
|Date of creation:||01 Jan 2002|
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- John K.-H. Quah, 2000.
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Econometric Society World Congress 2000 Contributed Papers
0437, Econometric Society.
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- 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.
- 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.
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