Hicksian complementarity and perturbed utility models

Roy Allen and John Rehbeck ()
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John Rehbeck: The Ohio State University

Economic Theory Bulletin, 2020, vol. 8, issue 2, No 6, 245-261

Abstract: Abstract This paper studies aggregate complementarity without price or income variation. We show that for a class of utility functions, variation in non-price observables allows one to recover a measure of complementarity similar to Hicksian complementarity. In addition, the entire Slutsky matrix can be recovered up to scale without price variation. We then examine aggregate complementarity in latent utility models used in discrete choice, bundles, and matching. We show that classical linear instrumental variables can recover Hicksian complementarity for the special case of quadratic utility.

Keywords: Hicksian complementarity; Demand; Instrumental variables (search for similar items in EconPapers)
JEL-codes: C10 D01 D11 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s40505-019-00180-6

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