Loss Aversion and Conspicuous Consumption in Networks

Yann Bramoullé and Christian Ghiglino

Working Papers from HAL

Abstract: We introduce loss aversion into a model of conspicuous consumption in networks. Agents allocate their income between a standard good and a status good to maximize a Cobb-Douglas utility. Agents interact over a connected network and compare their status consumption to their neighbors' average consumption. Loss aversion has a profound impact. If loss aversion is large enough relative to income heterogeneity, a continuum of Nash equilibria appears and all agents consume the same quantity of status good. Otherwise, there is a unique Nash equilibrium and richest agents earn strict status gains while poorest agents earn strict status losses.

Keywords: Loss Aversion; Conspicuous Consumption; Social Networks (search for similar items in EconPapers)
Date: 2022-04-05
New Economics Papers: this item is included in nep-gth, nep-mic, nep-net and nep-upt
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-03630455
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://amu.hal.science/hal-03630455/document (application/pdf)

Related works:
Working Paper: Loss Aversion and Conspicuous Consumption in Networks (2022)
Working Paper: Loss Aversion and Conspicuous Consumption in Networks (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-03630455

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().