The effect of aggregation on the magnitude of behavioral heterogeneity

Ralf Wilke

Economics Bulletin, 2003, vol. 4, issue 25, 1-8

Abstract: Recent literature has shown that the magnitude of behavioral heterogeneity of a population has an impact on the structure of mean demand. This paper investigates the effect of aggregation on the magnitude of behavioral heterogeneity if we aggregate disjoint subpopulations. Using the Hildenbrand and Kneip (1999) framework of behavioral heterogeneity, we show: (i) aggregation cannot decrease the degree of behavioral heterogeneity (ii) conditions under which aggregation increases the degree of behavioral heterogeneity are derived (iii) aggregation weakly increases the degree of behavioral heterogeneity.

JEL-codes: D0 (search for similar items in EconPapers)
Date: 2003-05-16
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