IN SEARCH OF GIFFEN BEHAVIOR

This paper develops a theory of Giffen behavior that results from a second rationing constraint. In contrast to standard analysis, this approach is virtually independent of the specific form of consumer preferences. The effect is first developed in a two‐good world along with an example, then extend...

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Bibliographic Details
Published inEconomic inquiry Vol. 29; no. 1; pp. 182 - 189
Main Authors Gilley, Otis W., Karels, Gordon V.
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.01.1991
Blackwell Publishers Ltd
Oxford University Press for the Western Economic Association International, etc
Western Economic Association
Subjects
Consumer behavior
Consumer preferences
Consumption function
Decision-making
Demand curves
Economic aspects
Economic models
Economic statistics
Economic theory
Economics
Food
Food consumption
Management
Preferences
Utility functions
Utility theory
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Summary:This paper develops a theory of Giffen behavior that results from a second rationing constraint. In contrast to standard analysis, this approach is virtually independent of the specific form of consumer preferences. The effect is first developed in a two‐good world along with an example, then extended to a more general case to determine if the effect vanishes as the choice set is expanded. The results demonstrate that Giffen behavior is plausible when a second rationing constraint applies and, furthermore, adding additional goods to the choice set does not necessarily cause the effect to vanish.
Bibliography:ark:/67375/WNG-Z4G99ZTV-3
istex:A0D61365C6F7310916A842572920067169BBAB12
ArticleID:ECIN182
Associate Professor, Department of Economics and Finance, Louisiana Tech University and Associate Professor, Department of Finance, University of Nebraska at Lincoln respectively. The authors would like to thank George Stigler, Thomas Borcherding, and two anonymous referees for helpful suggestions. Dawn Mach, Bakti Luddin, and Jack Fulcher provided valuable assistance in obtaining the information for the examples. Any remaining errors are the responsibility of the authors.
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.1991.tb01264.x