Cardinal Sins? Conspicuous Consumption, Cardinal Status and Inequality
This paper analyses the game of status where a large population of individuals with differing incomes have cardinal concerns over relative deprivation in terms of conspicuous consumption. Special cases include inequity aversion and social loss aversion, where negative comparisons are more important than positive, and “keeping up with the Joneses” preferences where individuals compare their consumption with the mean consumption of others. The Nash equilibrium of the resulting large population asymmetric game is inefficient. When preferences are rivalrous, the utilitarian optimal consumption schedule makes all better off, but under inequity aversion makes the rich worse off. Increases in inequality can increase consumption for most and make most worse off.
Date: 24 November 2020, 12:45 (Tuesday, 7th week, Michaelmas 2020)
Venue: Held on Zoom
Speaker: Ed Hopkins (University of Edinburgh)
Organising department: Department of Economics
Part of: Learning, Games and Network Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark