Preferences over Consumption and Status
AbstractIn many models of interdependent preferences the payoffs have not only personal value but also enter the social part of the utility. This duality creates a problem of distinguishing what influences the choice more: consumption or social concerns. To identify what drives the behavior it is necessary to have a model of preferences that allows for unambiguous separation of personal and social components. I use the preferences for consumption and status as an example to show that the axioms in the paper describe the preferences that have unique expected utility representation with consumption and social utilities entering additively. This makes it possible to experimentally determine the nature of social preferences without ad hoc assumptions and to estimate whether consumption or social value is more important in economic decisions.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2594.
Date of creation: Feb 2007
Date of revision: Jun 2007
Interdependent preferences; status; subjective probability;
Find related papers by JEL classification:
- C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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