IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Patterns Of Consumption In Discrete Choice Models With Asymmetric Interactions

Listed author(s):
  • Vassilis Koulovassilopoulos

    (South Bank University)

  • G. Iori

A common feature of many aggregate variables in economics and finance is that they exhibit oscillatory behaviour, showing boom-and-bust patterns. Examples are fad and bandwagon behaviour in sociology, business cycles in economics, bubbles in stock market prices, wave behaviour in the adoption of innovation technology.We study consumption behaviour in systems with heterogeneous interacting agents. Two different models are introduced, respectively with long and short range interactions among agents. At any time step an agent decides whether or not to consume a good, doing so if this provides positive utility. Utility is affected by idiosyncratic preferences (noise) and costs as well as externalities from other agents. Agents are ranked in classes, with interactions among agents depending on the agents' ``distance'' (such as, for example, differences in wealth), and they recognize peer, distinction and aspiration groups. We simulate the system numerically for different choices of the parameters as well as for different class (wealth) distributions and identify different complex patterns: a steady state regime with a variety of consumption modes of behaviour, and a wave/cycle regime. The cases of fashion (fad) and value goods are both analyzed.The crucial point in this model is not the exact description of individual behaviour but the interrelation between individuals and the statistical properties of consumers' characteristics. We want to identify which are the relevant mechanisms that determine the large scale behaviour of aggregate consumption. In our model the macro-level organization, manifests in complex consumption patterns, which emerge purely from the micro-level interactions among agents, without the coordinating effect of any aggregate signal.Particular emphasis is given to the dynamical properties of the model, and we provide examples of complex patterns, such as non-periodic consumption cycles and turbulent behaviour with boom and busts in consumption activity. Our model bears resemblance with models of statistical mechanics of disordered systems and provides an example of how the development of appropriate numerical approaches may provide fundamental advances in the understanding of the complex behaviour that arise from the nonlinear spatio-temporal interactions among a large number of units.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Society for Computational Economics in its series Computing in Economics and Finance 2000 with number 84.

in new window

Date of creation: 05 Jul 2000
Handle: RePEc:sce:scecf0:84
Contact details of provider: Postal:
CEF 2000, Departament d'Economia i Empresa, Universitat Pompeu Fabra, Ramon Trias Fargas, 25,27, 08005, Barcelona, Spain

Fax: +34 93 542 17 46
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:sce:scecf0:84. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.