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  3. American Economic Journal: Microeconomics
  4. May 2018
  5. Revealed Preferences for Diamond Goods

Revealed Preferences for Diamond Goods

  • Sam Cosaert
American Economic Journal: Microeconomics
vol. 10, no. 2, May 2018
(pp. 83-117)
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Abstract

When 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.

Citation

Cosaert, Sam. 2018. "Revealed Preferences for Diamond Goods." American Economic Journal: Microeconomics, 10 (2): 83-117. DOI: 10.1257/mic.20150168

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • P36 Socialist Institutions and Their Transitions: Consumer Economics; Health; Education and Training: Welfare, Income, Wealth, and Poverty
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