Slutsky Matrix Symmetry: A New Behavioral Condition

Victor Aguiar and Roberto Serrano

No 20228, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, 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.

Keywords: Utility Maximization; Slutsky Matrix (search for similar items in EconPapers)
JEL-codes: C50 C51 C52 C91 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-mic and nep-upt
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