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Do social status seeking behaviors worsen the tragedy of the commons?

Listed author(s):
  • Sébastien Rouillon

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - CNRS - Université Montesquieu - Bordeaux 4)

The present paper considers the exploitation of a common-property, nonrenewable resource, by individuals concerned with their social status. Assuming that the social status is reflected by the individuals’ relative consumptions, we formalize this motivation by means of a utility function, depending on the individual’s actual consumption and on the consumption level he aspires, the latter being related to the consumptions in his reference group. We compare the benchmark cooperative solution with a noncooperative Markov-perfect Nash equilibrium. We confirm, under more general conditions than in the existing literature, that the individuals’ concern for social status exacerbates the tragedy of the commons. We finally discuss the policy implications and provide a taxation scheme capable of implementing the cooperative solution as a noncooperative Markov-perfect Nash equilibrium. Copyright Springer Science+Business Media New York 2014

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Paper provided by HAL in its series Post-Print with number hal-01135584.

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Date of creation: 2014
Publication status: Published in Dynamic Games and Applications, Springer, 2014, 4 (1), pp.73-94
Handle: RePEc:hal:journl:hal-01135584
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01135584
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