Keeping Up with the Joneses as an Outcome of Getting Ahead of the Smiths. A Two-Stage Veblenian Status Game

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May 24, 2016

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Frédéric Gavrel, « Keeping Up with the Joneses as an Outcome of Getting Ahead of the Smiths. A Two-Stage Veblenian Status Game », HAL-SHS : économie et finance, ID : 10670/1.y1ricq


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In a status game, homogenous individuals first decide on their income (and on the effort necessary to that end) with the aim at Getting ahead of the Smithes (GAS). Next, they make use of a pure positional good to make incomes visible. Although the GAS hypothesis is ordinal, the signalling costs induce cardinal social concerns. The GAS hypothesis, translated into the KUJ (Keeping Up with the Joneses) (pride) concern, generates an equilibrium in which identical agents have unequal income levels. This equilibrium is an egalitarian optimum. But utilitarian and Paretian inefficiency are the price paid for equality.

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