Hicksian Complementarity and Perturbed Utility Models

21 Pages Posted: 29 Jun 2016 Last revised: 19 Feb 2019

See all articles by Roy Allen

Roy Allen

University of Western Ontario - Department of Economics

John Rehbeck

Ohio State University (OSU) - Economics

Date Written: February 14, 2019

Abstract

This paper studies aggregate complementarity without price or income variation. We show that for a class of utility functions, variation in non-price observables allows one to recover a measure of complementarity similar to Hicksian complementarity. In addition, the entire Slutsky matrix can be recovered up to scale without price variation. We then examine aggregate complementarity in latent utility models used in discrete bundles, stochastic choice, and matching. We show that classical linear instrumental variables can recover Hicksian complementarity for the special case of quadratic utility.

Keywords: Complementarity, Measurement

JEL Classification: D01, C30

Suggested Citation

Allen, Roy and Rehbeck, John, Hicksian Complementarity and Perturbed Utility Models (February 14, 2019). Available at SSRN: https://ssrn.com/abstract=2801345 or http://dx.doi.org/10.2139/ssrn.2801345

Roy Allen (Contact Author)

University of Western Ontario - Department of Economics ( email )

Social Science Centre, Room 4071
London, Ontario N6A 5C2
Canada

John Rehbeck

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States

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