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A Behavioural Approach to Kinked Demand Curves

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  • Stavros, Drakopoulos

Abstract

The starting point of this paper is the significance for economic theory of the introduction of threshold sensitive behavior which is better known in psychology as the Weber-Fechner Law. It is shown that the incorporation of this Law can give an individual multi-kinked demand curve which can be approximated as a market demand curve of the Sweezy type. In terms of macroeconomic significance, the Law can be connected to income policies, saving behavior and expectations in the money markets.

Suggested Citation

  • Stavros, Drakopoulos, 1992. "A Behavioural Approach to Kinked Demand Curves," MPRA Paper 90373, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90373
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    File URL: https://mpra.ub.uni-muenchen.de/90373/1/MPRA_paper_90373.pdf
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    References listed on IDEAS

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    Cited by:

    1. Paul J.J. Welfens, 2020. "Doubts on the Role of Disturbance Variance in New Keynesian Models and Suggested Refinements," EIIW Discussion paper disbei275, Universitätsbibliothek Wuppertal, University Library.

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    More about this item

    Keywords

    Kinked Demand; Price Threshold; Consumer Behaviour;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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