Stochastic complementarity

Paola Manzini; Marco Mariotti; Levent Ülkü

doi:10.1111/ecoj.12601

Stochastic complementarity

Paola Manzini, Marco Mariotti, Levent Ülkü

Research output: Contribution to journal › Article › peer-review

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 it is arguably reasonable for a complementarity notion to possess. We discuss three different possible resolutions of the conflict.

Original language	English
Pages (from-to)	1343-1363
Journal	The Economic Journal
Volume	129
Issue number	619
Early online date	8 Jun 2018
DOIs	https://doi.org/10.1111/ecoj.12601
Publication status	Published - Apr 2019

Keywords

Complements and substitues
Correlation
Stochastic choice

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10.1111/ecoj.12601

Manzini_et_al-2018-The_Economic_Journal_AM
Copyright © 2018, Royal Economic Society, published by Wiley. This work is made available online in accordance with the publisher’s policies. This is the author created, accepted version manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1111/ecoj.12601
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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 it is arguably reasonable for a complementarity notion to possess. We discuss three different possible resolutions of the conflict. ",

keywords = "Complements and substitues, Correlation, Stochastic choice",

author = "Paola Manzini and Marco Mariotti and Levent {\"U}lk{\"u}",

note = "Levent Ulku acknowledges ﬁnancial sup port from the Asociacion Mexicana de Cultura.",

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T1 - Stochastic complementarity

AU - Manzini, Paola

AU - Mariotti, Marco

AU - Ülkü, Levent

N1 - Levent Ulku acknowledges ﬁnancial sup port from the Asociacion Mexicana de Cultura.

PY - 2019/4

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KW - Complements and substitues

KW - Correlation

KW - Stochastic choice

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JO - The Economic Journal

JF - The Economic Journal

IS - 619

ER -

Stochastic complementarity

Abstract

Keywords

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