Slutsky Matrix Symmetry: A New Behavioral Condition

Victor Aguiar and Roberto Serrano

No 2022-004, Working Papers from Brown University, Department of Economics

Abstract: The Slutsky matrix function encodes all the information about local variations in demand with respect to small (Slutsky) compensated price changes. When the demand function is the result of utility maximization the Slutsky matrix is symmetric. However, symmetry does not imply rationality. Here, we provide a necessary and sufficient condition for Slutsky symmetry. The new condition requires symmetric attention to compensated price-paths.

Date: 2022
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Working Paper: Slutsky Matrix Symmetry: A New Behavioral Condition (2022)
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