Econometrica: Jan 2004, Volume 72, Issue 1

Information‐Based Relative Consumption Effects
p. 93-118

Larry Samuelson

Preferences exhibit relative consumption effects if a person's satisfaction with their own consumption appears to depend upon how much others are consuming. This paper examines a model of an evolutionary environment in which Nature optimally builds relative consumption effects into preferences in order to compensate for incomplete environmental information.

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