When Do Financial Constraints Increase Preference for More Durable Goods: Making the Study of Utility’s Third Derivative Great Again
نویسنده
چکیده
Recent finding by Tully, Hershfield, and Meyvis (JCR 2015) that making people feel more financially constrained shifts their demand towards durable goods is consistent with some but not all standard microeconomic models of consumer behavior. This paper provides an easily verifiable sufficient condition for the underlying utility function to produce the observed preferences: marginal utility diminishing at an increasing rate. On the other hand, homothetic preferences commonly assumed by both analytical and empirical researchers cannot produce the observed findings. Contact: Robert Zeithammer, [email protected]
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تاریخ انتشار 2016