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Relational consumption and nonlinear dynamics in an overlapping generations model

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  • Angelo Antoci

    ()

  • Mauro Sodini

    ()

  • Luca Zarri

    ()

Abstract

In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here, we show that when the old perceive private and relational consumption as substitutable goods, a series of interesting dynamic outcomes—such as local indeterminacy, nonlinear phenomena (including chaotic dynamics) and even multiple equilibria with global indeterminacy—may arise. We also draw some welfare implications and relate them to the well-known “happiness paradox” arising within contemporary affluent societies. Copyright Springer-Verlag Italia 2014

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Bibliographic Info

Article provided by Springer in its journal Decisions in Economics and Finance.

Volume (Year): 37 (2014)
Issue (Month): 1 (April)
Pages: 137-158

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Handle: RePEc:spr:decfin:v:37:y:2014:i:1:p:137-158

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Related research

Keywords: Overlapping generations framework; Local and global indeterminacy; Leisure; Relational goods; Happiness paradox; D63; J22; O33; O41; Z13;

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References

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