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Exploring the Behavior of Economic Agents: the role of relative preferences

  • Joseph Cavanaugh


    (Wright State University - LC)

  • Michelle Alexopoulos


    (University of Toronto)

Standard economic theory assumes individuals choose actions that optimize their expected utility. In this paper we investigate how the existence of players with non-standard preferences may influence economic agents' behavior in some of the most frequently studied non-cooperative games. We find that allowing for the existence of agents with relative preferences can help explain observed economic actions which, at times, appear counter-intuitive.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 12 (2006)
Issue (Month): 2 ()
Pages: 1-7

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Handle: RePEc:ebl:ecbull:eb-06l20001
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  1. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
  2. Larry Samuelson, 2004. "Information-Based Relative Consumption Effects," Econometrica, Econometric Society, vol. 72(1), pages 93-118, 01.
  3. David K Levine, 1997. "Modeling Altruism and Spitefulness in Experiments," Levine's Working Paper Archive 2047, David K. Levine.
  4. Otis Duncan, 1975. "Does money buy satisfaction?," Social Indicators Research, Springer, vol. 2(3), pages 267-274, December.
  5. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
  6. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
  7. Neumark, David & Postlewaite, Andrew, 1998. "Relative income concerns and the rise in married women's employment," Journal of Public Economics, Elsevier, vol. 70(1), pages 157-183, October.
  8. Akerlof, George A & Yellen, Janet L, 1988. "Fairness and Unemployment," American Economic Review, American Economic Association, vol. 78(2), pages 44-49, May.
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