The Cognitive and Behavioral Economics of Envy

28 Pages Posted: 29 May 2007

See all articles by Daniel John Zizzo

Daniel John Zizzo

University of Queensland - School of Economics

Date Written: May 2007

Abstract

Economists traditionally model choice as the maximization of a stable utility function. A simple way of modeling envy (though not the only one) is by adding a term which is a negative function of the consumption of the other agent(s) in one's own utility function. This paper briefly reviews some applications and implications of the envy model. While the potential applications of the envy model are increasingly well understood, the cognitive economics of envy is much less well understood. First, an envy model requires a specification of the reference group in relation to which the agent is in a rate race for. Second, envy could operate not between individuals but between groups. Third, and more generally, envy has a 'thick' cognitive component underlying the behavior that is supposed to produce.

Keywords: envy, emotions, cognition, reference group, groups

JEL Classification: C91, D11, D21

Suggested Citation

Zizzo, Daniel John, The Cognitive and Behavioral Economics of Envy (May 2007). Available at SSRN: https://ssrn.com/abstract=989360 or http://dx.doi.org/10.2139/ssrn.989360

Daniel John Zizzo (Contact Author)

University of Queensland - School of Economics ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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