Patterns of Consumption in a Discrete Choice Model with Asymmetric Interactions

10 Pages Posted: 9 Nov 2000

See all articles by Vassilis Koulovassilopoulos

Vassilis Koulovassilopoulos

London South Bank University - Business

Giulia Iori

City University London - Department of Economics

Date Written: October 15, 2000

Abstract

We study the consumption behaviour of an asymmetric network of heterogeneous agents in the framework of discrete choice models with stochastic decision rules. We assume that the interactions among agents are uniquely specified by their "social distance" and consumption is driven by peering, distinction and aspiration effects. The utility of each agent is positively or negatively affected by the choices of other agents and consumption is driven by peering, imitation and distinction effects. The dynamical properties of the model are explored, by numerical simulations, using three different evolution algorithms with: parallel, sequential and random-sequential updating rules. We analyze the long-time behaviour of the system which, given the asymmetric nature of them interactions, can either converge into a fixed point or a periodic attractor. We discuss the role of symmetric versus asymmetric contributions to the utility function and also that of idiosyncratic preferences, costs and memory in the consumption decision of the agents.

Keywords: Discrete Choice Models, Asymmetric Interactions, Heterogeneous Interacting Agents, Consumption Behaviour, Complexity

JEL Classification: D11, D62, D71, D91, E1

Suggested Citation

Koulovassilopoulos, Vassilis and Iori, Giulia, Patterns of Consumption in a Discrete Choice Model with Asymmetric Interactions (October 15, 2000). Available at SSRN: https://ssrn.com/abstract=248157 or http://dx.doi.org/10.2139/ssrn.248157

Vassilis Koulovassilopoulos (Contact Author)

London South Bank University - Business ( email )

103 Borough Road
London SE1 0AA
United Kingdom
+44 20 7815 7785 (Phone)
+ 44 20 7815 7793 (Fax)

Giulia Iori

City University London - Department of Economics ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

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