Conspicuous Consumption: An Evolutionary Game Theory Explanation
30 Pages Posted: 12 Nov 2017
Date Written: November 8, 2017
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: Suggested Citation