71st International Atlantic Economic Conference

March 16 - 19, 2011 | Athens, Greece

On Demand: A Descriptive Non-utility Maximizing Approach

Saturday, 19 March 2011: 14:30
Lars-Göran Larsson, Ph.D. , National Ekonomi, Gothenburg University, Göteborg, Sweden
 In this paper we assume that choice of commodities at the individual (household) level is made in the budget set and that the choice can be described by a probability density function. We prove that negativity (()0xExp∂<∂) is valid for one(x) or two choice variables (x, y) (No Giffen good).Negativity at the market level is valid by summation. The expected demand functions are homogeneous of degree zero in prices and income. We use general positive continuous functions f(x), f(x, y) defined on the bounded budget set. We transform them into probability density functions to calculate E(x) and prove negativity. The present approach use simple assumptions and is descriptive in its nature. Any choice behaviour that can be  described by a continuous density function gives the above results.

KEYWORDS: Negativity (No Giffen good) and other properties of consumer demand functions, Microeconomics, Consumer theory, Consumer behaviour, Choice described in random terms, Expected individual and market demand.