Behavioral Complementarity (not Heterogeneity) Causes the Law of Demand

Etienne deVillemeur
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Etienne deVillemeur: University of Toulouse

No 1616, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: In a recent contribution ``On Behavioural Heterogeneity'' (1999), W. Hildenbrand and A. Kneip propose an index of Heterogeneity that allow them to establish that ``the higher the degree of behavioural heterogeneity the less sensitive the aggregate consumption expenditure ratio upon prices''. This note evidences that, when the population becomes large and the degree of heterogeneity is supposed to be ``maximum'', then either almost all individuals behave ``Cobb-Douglas like'' for prices restrained to be in any compact set of the positive ortant, or they behave in a significantly different manner over a subset of prices that is of almost zero measure. This questions again the representation of heterogeneity involved for the resolution of the aggregation problem over the last years.

Date: 2000-08-01
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