RESOURCE-GRABBING BY STATUS-CONSCIOUS AGENTS
Ngo Long and
Shengzu Wang ()
Departmental Working Papers from McGill University, Department of Economics
We introduce a dynamic model of resource-grabbing by status-conscious agents, i.e., agents value not only their absolute consumption levels, but also the relative status within their reference group. We explore the effect of the concern for relative consumption on the growth rate and the welfare of an economy where agents appropriate from a common property resource. Our model shows that the greater is agents' concern about their relative status, the more aggressively they tend to behave. Consequently, the social welfare is lower because the growth rate of the public asset is reduced doe to higher extraction rate. We also consider the effect of increased heterogeneity, and show that social welfare decreases as the distribution of status-consciousness among agents widens.
JEL-codes: C73 D6 D9 O1 Q20 (search for similar items in EconPapers)
Pages: 34 pages
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Journal Article: Resource-grabbing by status-conscious agents (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:mcl:mclwop:2008-08
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