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Revealed Preferences for Diamond Goods†

Revealed Preferences for Diamond Goods† AbstractWhen consumers care not only for the quantity but also the value of a product, it could be rational to purchase products as they become more expensive. This study provides nonparametric—revealed preference—conditions to measure consumers' marginal willingness to pay for value (i.e., diamondness) associated with particular goods. This is the first nonparametric test of price-dependent preferences. The proposed diamondness measure is applied to observational data from the Russia Longitudinal Monitoring Survey. The results show that this diamondness measure is related to a product's visibility to society, which indicates a certain degree of conspicuous consumption. (JEL D12, P36) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Revealed Preferences for Diamond Goods†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20150168
Publisher site
See Article on Publisher Site

Abstract

AbstractWhen consumers care not only for the quantity but also the value of a product, it could be rational to purchase products as they become more expensive. This study provides nonparametric—revealed preference—conditions to measure consumers' marginal willingness to pay for value (i.e., diamondness) associated with particular goods. This is the first nonparametric test of price-dependent preferences. The proposed diamondness measure is applied to observational data from the Russia Longitudinal Monitoring Survey. The results show that this diamondness measure is related to a product's visibility to society, which indicates a certain degree of conspicuous consumption. (JEL D12, P36)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: May 1, 2018

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