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Stochastic Complementarity

Paola Manzini (), Marco Mariotti and Levent Ülkü ()

No 201505, Discussion Paper Series, School of Economics and Finance from School of Economics and Finance, University of St Andrews

Abstract: The Hicksian definition of complementarity and substitutability may not apply in contexts in which agents are not utility maximisers or where price or income variations, whether implicit or explicit, are not available. We look for tools to identify complementarity and substitutability satisfying the following criteria: they are behavioural (based only on observable choice data); model-free (valid whether the agent is rational or not); and they do not rely on price or income variation. We uncover a conflict between properties that any complementarity notion should intuitively possess. We discuss three different possible resolutions of the conflict.

Keywords: Complements and substitutes; Correlation; Stochastic choice. (search for similar items in EconPapers)
JEL-codes: D01 (search for similar items in EconPapers)
Date: 2015-04-11, Revised 2017-03-12
New Economics Papers: this item is included in nep-mic and nep-upt
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Working Paper: Stochastic Complementarity (2015) Downloads
Working Paper: Stochastic Complementarity (2015) Downloads
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