A Behavioral Model of Conumption Patterns: The Effects of Cognitive Dissonance and Conformity
AbstractCognitive dissonance causes people to rationalize actions that differ from their own preferences.Conformity, on the other hand, causes people to change their behavior as a result of pressure from others.This paper investigates the consequences of preference dynamic that occur when individuals rationalize their preferences, are conformists and have a minimum consumption constraint.The main results are: (1) Individuals who have a greater tendency toward conformity will rationalize their preferences to a greater degree, (2) Individuals' optimal consumption pattern will be unstable and scatter over time, (3) Average consumption in society will increase along a cyclical path and (4) An increase in either cognitive dissonance or conformity induces greater volatility of average consumption.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2004-48.
Date of creation: 2004
Date of revision:
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Web page: http://center.uvt.nl
rationality; cognitive science; consumption; volatility;
Find related papers by JEL classification:
- D90 - Microeconomics - - Intertemporal Choice - - - General
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-31 (All new papers)
- NEP-CBE-2004-06-13 (Cognitive & Behavioural Economics)
- NEP-EVO-2004-06-13 (Evolutionary Economics)
- NEP-EVO-2004-08-31 (Evolutionary Economics)
- NEP-MIC-2004-08-31 (Microeconomics)
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