Collective Household Models: Principles and Main Results

In the traditional approach to consumer behaviour it is assumed that households behave as if they were single decision‐making units. This approach has methodological, empirical and welfare economic deficiencies. A valuable alternative to the traditional model is the collective approach to household behaviour. The collective approach explicitly takes account of the fact that multi‐person households consist of several members which may have different preferences. Among these household members, an intrahousehold bargaining process is assumed to take place. In addition to providing an introduction to the collective approach, this survey intends to show how different collective household models, each with their own aims and assumptions, are connected.