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Multiple Constraints and Hicksian Complementarity: A Generalization and an Application to Portfolio Choice

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  • Christian E. Weber

Abstract

Ian Steedman (Consumption Takes Time: Implications for Economic Theory, Routledge, London, 2001) has shown, among other things, that when a household chooses amounts of time to allocate to competing consumption activities subject to both a money income constraint and a time constraint, at least two consumption activities must have at least one compensated complement each. This paper generalizes Steedman's result in several directions and uses the generalized version to study compensated complementarity among state–dependent consumption levels and asset purchases in a model of portfolio choice under uncertainty.

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  • Christian E. Weber, 2003. "Multiple Constraints and Hicksian Complementarity: A Generalization and an Application to Portfolio Choice," Metroeconomica, Wiley Blackwell, vol. 54(1), pages 29-44, February.
    • Handle: RePEc:bla:metroe:v:54:y:2003:i:1:p:29-44
    DOI: 10.1111/1467-999X.00156
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    References listed on IDEAS

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    1. Gilley, Otis W & Karels, Gordon V, 1991. "In Search of Giffen Behavior," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 182-189, January.
    2. Silberberg, Eugene, 1972. "Separability and Complementarity," American Economic Review, American Economic Association, vol. 62(1), pages 196-197, March.
    3. Cornes,Richard, 1992. "Duality and Modern Economics," Cambridge Books, Cambridge University Press, number 9780521336017, October.
    4. Weber, Christian E., 1999. "On the determinants of complementarity: Elasticities of substitution, income shares, and relative prices," Research in Economics, Elsevier, vol. 53(4), pages 323-336, December.
    5. Shefrin, H. M. & Heineke, J. M., 1979. "On duality theory in intertemporal choice with uncertainty," Economics Letters, Elsevier, vol. 3(1), pages 19-23.
    6. Diamond, Peter A & Yaari, Menahem, 1972. "Implications of the Theory of Rationing for Consumer Choice Under Uncertainty," American Economic Review, American Economic Association, vol. 62(3), pages 333-343, June.
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