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The Demand For Goods Under Mixture Aversion
Author(s) -
Butler David J.,
Moffatt Peter G.
Publication year - 2000
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00198
Subject(s) - economics , axiom , microeconomics , risk aversion (psychology) , mathematical economics , function (biology) , utility maximization , maximization , demand curve , econometrics , mathematics , expected utility hypothesis , geometry , evolutionary biology , biology
We analyse the demand for goods which the consumer has an aversion to consuming in mixtures. Examples are presented. It is suggested that the axiom of non‐satiation should be relaxed in order for the model to be internally consistent. The indifference map with mixture aversion and satiation is constructed and is shown to have very unusual properties. It is then demonstrated that constrained maximization of the underlying utility function can result in both goods being consumed. It is also demonstrated that the type of goods analysed here can exhibit the rare characteristic of Giffenity.