Modeling Luxury Consumption: An Inter-Income Classes Study of Demand Dynamics and Social Behaviors

• Main Authors: Carlin, Anaïs, Verel, Sébastien, Collard, Philippe
• Other Authors: Groupe de Recherche en Droit, Economie et Gestion (GREDEG), Université Nice Sophia Antipolis (1965 - 2019) (UNS), COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-Centre National de la Recherche Scientifique (CNRS)-Université Côte d'Azur (UCA), Laboratoire d'Informatique Signal et Image de la Côte d'Opale (LISIC), Université du Littoral Côte d'Opale (ULCO), Laboratoire d'Informatique, Signaux, et Systèmes de Sophia-Antipolis (I3S) / Groupe SCOBI, Modèles Discrets pour les Systèmes Complexes (Laboratoire I3S - MDSC), Laboratoire d'Informatique, Signaux, et Systèmes de Sophia Antipolis (I3S), COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-Centre National de la Recherche Scientifique (CNRS)-Université Côte d'Azur (UCA)-Université Nice Sophia Antipolis (1965 - 2019) (UNS), COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-Centre National de la Recherche Scientifique (CNRS)-Université Côte d'Azur (UCA)-Laboratoire d'Informatique, Signaux, et Systèmes de Sophia Antipolis (I3S)
• Format: Conference Object
• Language: English
• Published: HAL CCSD 2013
• Subjects: Agent-based model; Income classes; Preference formation; Consumption; Luxury good; [INFO.INFO-MO]Computer Science [cs]/Modeling and Simulation; [INFO.INFO-MA]Computer Science [cs]/Multiagent Systems [cs.MA]; [QFIN]Quantitative Finance [q-fin]; Iceland
• Online Access: https://hal.science/hal-01288725; https://hal.science/hal-01288725/document; https://hal.science/hal-01288725/file/Abstract%20WEHIA.pdf

International audience We start from the observation that theoretical studies of luxury consumption are relatively rare in the economic analysis. In fact, while homothetic preferences simply cannot address the issue of luxury consumption, the use of non-homothetic preferences is restricted, at least in standard models, by the absence of consensus about the nature of luxury goods. Using the agent-based computational economics methodology, we, therefore, choose to dene a luxurious item by its ability to display social statute. We, rst, put our analysis in perspective via a short revue of the main contributions about consumption behavior in social context. Through this revue, we identify a few social phenomenons involved in the formation of individual preferences: imitation, diferentiation and innovation. Second, building on these simple social behaviors, we develop a model of luxury preference formation, in which preferences evolve endogenously. Third, we explore the emerging properties of the model, especially, under which conditions we observe a specialization of consumption by social classes. Finally we analyzes the impact of "Veblen eect" on consumption behaviors.