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Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data

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  • Sabrina Bruyneel

    ()

  • Laurens Cherchye

    ()

  • Bram De Rock

    ()

Abstract

We use experimental data to analyze consumption decisions by groups of individuals who have to reach a consensus on spending a joint budget. Our experiment involves dyads (i.e. two-member groups) who have to compose consumption bundles consisting of three commodities (wine, orange juice and M&Ms). We focus on the collective consumption model to describe group behavior. This model represents group decisions as Pareto optimal outcomes of a within-group bargaining process, with rational group members who are each characterized by individual bargaining weights. We also consider specifications of the collective model that restrict the variation of these bargaining weights. A distinguishing feature of our study is that we use revealed preference testing tools to assess the goodness-of-fit and discriminatory power of alternative specifications of the collective model. Our experimental results suggest that the most appropriate model specification allows for a limited variation of the bargaining weights. Copyright The Author(s) 2012

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Bibliographic Info

Article provided by Springer in its journal Review of Economics of the Household.

Volume (Year): 10 (2012)
Issue (Month): 3 (September)
Pages: 395-421

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Handle: RePEc:kap:reveho:v:10:y:2012:i:3:p:395-421

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Web page: http://www.springerlink.com/link.asp?id=109451

Related research

Keywords: Pareto efficiency; Collective consumption decisions; Revealed preferences; Experimental data; Bargaining weights; C14; C92; D11; D12; D13;

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References

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Cited by:
  1. Laurens Cherchye & Bram De Rock & Vincenzo Platino, 2012. "Private versus public consumption within groups: testing the nature of goods from aggregate data," ULB Institutional Repository 2013/131703, ULB -- Universite Libre de Bruxelles.

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