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Stochastic Complementarity

Author

Listed:
  • Paola Manzini

    (University of St. Andrews, and IZA)

  • Marco Mariotti

    (Queen Mary University of London)

  • Levent Ulkti

    (ITAM)

Abstract

Classical definitions of complementarity are based on cross price elasticities, and so they do not apply, for example, when goods are free. This context includes many relevant cases such as online newspapers and public attractions. We look for a complementarity notion that does not rely on price variation and that is: behavioural (based only on observable choice data); and model-free (valid whether the agent is rational or not). We uncover a conflict between properties that complementarity should intuitively possess. We discuss three ways out of the impossibility.

Suggested Citation

  • Paola Manzini & Marco Mariotti & Levent Ulkti, 2015. "Stochastic Complementarity," Working Papers 745, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:745
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    References listed on IDEAS

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    Cited by:

    1. Roy Allen & John Rehbeck, 2023. "Revealed stochastic choice with attributes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(1), pages 91-112, January.
    2. Iaria, Alessandro & Wang, Ao, 2021. "A note on stochastic complementarity for the applied researcher," Economics Letters, Elsevier, vol. 199(C).
    3. Iaria, Alessandro & ,, 2020. "Identification and Estimation of Demand for Bundles," CEPR Discussion Papers 14363, C.E.P.R. Discussion Papers.
    4. Iaria, Alessandro & ,, 2020. "Inferring Complementarity from Correlations rather than Structural Estimation," CEPR Discussion Papers 14273, C.E.P.R. Discussion Papers.
    5. Roy Allen & John Rehbeck, 2020. "Hicksian complementarity and perturbed utility models," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 245-261, October.

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    More about this item

    Keywords

    Complements and substitutes; Correlation; Stochastic choice;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General

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