A Human Relations Paradox

CER-ETH Working Paper No. 11/145

13 Pages Posted: 26 Apr 2011

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Hans H. Haller

Virginia Polytechnic Institute & State University - Department of Economics

Date Written: April 26, 2011

Abstract

We present a variant of a general equilibrium model with group formation to study how changes of non-consumptive benefits from group formation impact on the well-being of group members. We identify a human relations paradox: Positive externalities increase, but none of the group members gains in equilibrium. Moreover, a member who experiences an increase of positive emotional benefits in a group may become worse off in equilibrium.

Keywords: Group formation, competitive markets, human relation, exit

JEL Classification: D41, D50, D60

Suggested Citation

Gersbach, Hans and Haller, Hans H., A Human Relations Paradox (April 26, 2011). CER-ETH Working Paper No. 11/145. Available at SSRN: https://ssrn.com/abstract=1823342 or http://dx.doi.org/10.2139/ssrn.1823342

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Hans H. Haller

Virginia Polytechnic Institute & State University - Department of Economics ( email )

3021 Pamplin Hall
Blacksburg, VA 24061
United States
540-231-7591 (Phone)
540-231-5097 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
57
Abstract Views
571
rank
372,338
PlumX Metrics