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Interpersonal Effects in Consumption: Evidence from the Automobile Purchases of Neighbors

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  • Mark Grinblatt
  • Matti Keloharju
  • Seppo Ikaheimo

Abstract

This study analyzes the automobile purchase behavior of all residents of two Finnish provinces over several years. It finds that a consumer's purchases are strongly influenced by the purchases of his neighbors, particularly purchases in the recent past and by neighbors who are geographically most proximate. There is little evidence that emotional biases, like envy or an urge to conform, lie behind the interpersonal influence in automobile consumption. The most reasonable alternative explanation for these findings is some form of information sharing among neighbors.

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File URL: http://icfpub.som.yale.edu/publications/2474
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Bibliographic Info

Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number amz2474.

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Date of creation: 01 Apr 2004
Date of revision: 31 Dec 1969
Handle: RePEc:ysm:somwrk:amz2474

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Web page: http://icf.som.yale.edu/
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  5. John Y. Campbell & John Cochrane, 1999. "Force of Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 205-251, April.
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  10. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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  12. Wolfgang Pesendorfer, 1993. "Design Innovation and Fashion Cycles," Discussion Papers 1049, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. John Y. Campbell & John H. Cochrane, 1994. "By force of habit: a consumption-based explanation of aggregate stock market behavior," Working Papers 94-17, Federal Reserve Bank of Philadelphia.
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  19. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
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Cited by:
  1. Enrichetta Ravina, 2005. "Keeping Up with the Joneses: Evidence from Micro Data," 2005 Meeting Papers 557, Society for Economic Dynamics.
  2. Federico Cingano & Alfonso Rosolia, 2006. "People I Know: Workplace Networks and Job Search Outcomes," Temi di discussione (Economic working papers) 600, Bank of Italy, Economic Research and International Relations Area.
  3. Bruce Sacerdote & David Marmaros, 2005. "How Do Friendships Form?," NBER Working Papers 11530, National Bureau of Economic Research, Inc.
  4. Enrico Moretti, 2008. "Social Learning and Peer Effects in Consumption: Evidence from Movie Sales," NBER Working Papers 13832, National Bureau of Economic Research, Inc.
  5. Clark, Andrew E. & Lohéac, Youenn, 2005. ""It Wasn't Me, It Was Them!" - Social Influence in Risky Behavior by Adolescents," IZA Discussion Papers 1573, Institute for the Study of Labor (IZA).
  6. Yannis Ioannides, 2006. "Empirics of Social Interactions," Discussion Papers Series, Department of Economics, Tufts University 0611, Department of Economics, Tufts University.
  7. Piero Cipollone & Alfonso Rosolia, 2006. "Social Interactions in High School: Lessons from an Earthquake," Temi di discussione (Economic working papers) 596, Bank of Italy, Economic Research and International Relations Area.

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