Conspicuous Consumption: An Evolutionary Game Theory Explanation

30 Pages Posted: 12 Nov 2017

Date Written: November 8, 2017

Abstract

The literature has provided a vast amount of empirical evidence consistent with the idea that individuals are affected by their relative position. However, the literature has found it difficult to rationalize this behaviour. In other words, there are few convincing explanations on why individuals are affected by their relative position. My main contribution is to shed light on explaining why individuals have developed relative concerns preferences, inducing them to consume conspicuously. I propose a model of evolutionary game theory where individuals may choose to consume conspicuously, in order to achieve social capital and thus gain a better relative position, or not. I show that conspicuous consumption was constituted and Evolutionary Stable Strategy (ESS) and is asymptotically stable in the Replicator Dynamic, since conspicuous consumption confers individuals an evolutionary advantage through increases in mating opportunities, wealth, power and allies.

Keywords: Relative Concerns, Conspicuous Consumption, Evolutionary Games

JEL Classification: C73, D03, I31

Suggested Citation

Montano Campos, Felipe, Conspicuous Consumption: An Evolutionary Game Theory Explanation (November 8, 2017). Available at SSRN: https://ssrn.com/abstract=3067735 or http://dx.doi.org/10.2139/ssrn.3067735

Felipe Montano Campos (Contact Author)

University of San Andres (UdeSA) ( email )

Vita Dumas 284
(1644) Victoria, Pcia
Buenos Aires, Buenos Aires 1644
Argentina

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