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Interdependent preferences and segregating equilibria

✍ Scribed by Antonio Cabrales; Antoni Calvó-Armengol

Book ID
113707950
Publisher
Elsevier Science
Year
2008
Tongue
English
Weight
221 KB
Volume
139
Category
Article
ISSN
0022-0531

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The theoretical model of Gaertner (1974) and Pollak (1976) for the interdependence of preferences in the Linear Expenditure System is estimated for a cross-section of households. The interdependence of consumption of dierent households has implications for the stochastic structure of the model and f

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This article shows by example that when workers care about relative income and are free to choose their coworkers, the equilibrium distribution of wages within firms must be less dispersed than the corresponding distribution of marginal products. An implicit market for within-firm status is shown to