Patterns of consumption in socio-economic models with heterogeneous interacting agents

TL;DR

This paper investigates how heterogeneous agents' consumption behaviors form complex patterns in socio-economic models, considering different interaction ranges and types of goods, revealing steady states and cyclical regimes.

Contribution

Introduces two models of consumption with long and short-range interactions, analyzing complex behaviors like steady states and cycles in socio-economic systems.

Findings

Identification of steady state consumption regimes.

Discovery of wave and cycle consumption patterns.

Analysis of fad and value goods impacts.

Abstract

We study consumption behaviour in systems with heterogeneous interacting agents. Two different models are introduced, respectively with long and short range interactions among agents. At any time step an agent decides whether or not to consume a good, doing so if this provides positive utility. Utility is affected by idiosyncratic preferences and costs as well as externalities from other agents. Agents are ranked in classes and recognize peer, distinction and aspiration groups. We simulate the system for different choices of the parameters and identify different complex patterns: a steady state regime with a variety of consumption modes of behaviour, and a wave/cycle regime. The cases of fad and value goods are both analyzed.