Inefficient Household Decisions and Efficient Markets

CES Working Paper at University of Munich No. 138

Posted: 19 May 1998

See all articles by Hans H. Haller

Hans H. Haller

Virginia Polytechnic Institute & State University - Department of Economics

Date Written: June 1997

Abstract

Collective consumption decisions taken by the members of a household may prove inefficient. This paper investigates the impact of inefficient household decisions on market performance when there is competitive exchange among households. Market efficiency can occur when household inefficiencies are merely due to inefficient net trades with the market. On the other hand, if household inefficiencies are solely caused by an inefficient distribution of a household's aggregate consumption to its individual members, then market efficiency is bound to fail.

JEL Classification: D31, E21

Suggested Citation

Haller, Hans H., Inefficient Household Decisions and Efficient Markets (June 1997). CES Working Paper at University of Munich No. 138, Available at SSRN: https://ssrn.com/abstract=48651

Hans H. Haller (Contact Author)

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

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Blacksburg, VA 24061
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