Revealed preferences for diamond goods.Authors: COSAERT Sam.
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.
Reference: COSAERT Sam. Revealed preferences for diamond goods. American Economic Journal: Microeconomics, 2018, vol. 10, n°2, pp. 83-117.Keywords: