LandscapeintheEconomyofConspicuousConsumptions Situngkir,Hokky MunichPersonalRePEcArchive

Munich Personal RePEc Archive

Landscape in the Economy of Conspicuous Consumptions

Situngkir, Hokky

Bandung Fe Institute

7 May 2010

Online at https://mpra.ub.uni-muenchen.de/22948/

MPRA Paper No. 22948, posted 30 May 2010 06:37 UTC

Landscape in t he Economy of Conspicuous Consumpt ions

Hokky Sit ungkir

[hs@compsoc.bandungfe.net ] Dept . Comput at ional Sociology Bandung Fe Inst it ut e

Abstract

Psychological st at es side by side w it h t he bounded rat ional expect at ions among social agent s cont ribut es t o t he pat t ern of consumpt ions in economic syst em. One of t he psychological st at es are t he envy – a t endency t o emulat e any gaps w it h ot her agent s’ propert ies. The evolut ionary game t heoret ic w orks on conspicuous consumpt ion are explored by grow ing t he micro-view of economic agency in lat t ice-based populat ions, t he landscape of consumpt ions. The emerged macro-view of mult iple equilibria is show n in comput at ional simulat ive demonst rat ions alt oget her w it h t he spat ial clust ered agent s based upon t he emerged agent s’ economic profiles.

Keyw ords: conspicuous consumpt ion, behavioral economics, agent -based simulat ions.

2

Envy is ever joined w it h t he comparing of a man's self;

and w here t here is no comparison, no envy!

F. Bacon, Sr.

Thou shalt not covet t hy neighbor's w ife;

t hou shalt not covet t hy neighbor's house, nor his field ...

nor anyt hing t hat is t hy neighbor's.

t he 10^{t h} rule in t en commandment s

1. Introduction

There have been broad recent underst andings on human economic behaviors out side economic discourses. Economic decisions are alw ays becoming one of t he most complex t hings in economic discussions. One of t hem is t he w ay w e choose our pat t ern of consumpt ion. It has been a common underst anding t hat t he pat t ern of consumpt ion is st rongly relat ed t o t he social and economic st at us.

A lot of t hings are being market ed not only for t he funct ionalit y or degree of necessit y solely, but also relat ed t o t he profile beneficiaries. M ost luxurious st uffs are placed in t he market as a sort of conspicuous consumpt ion. They are being sold and bought for t he need of good reput at ion, pecuniary st rengt h and good name of buyers, or social leisure of having more t han ot hers. This is direct ly reflect ed in our daily urban and highly organized indust rial societ y [19], from t he t ype of cellular phones, dressings, st yle and brand, even place of lunch and recreat ion t o t he luxurious home living and daily vehicles.

While income is an import ant measure for social class, t he pat t ern of consumpt ion is t he w ay t o show ot her people conspicuously t he represent ed social class. A good and unleashed descript ion of t he relat edness of bet w een consumpt ion is described in [18]. A lot of t hings are t hus, bought in order t o be show n t o ot hers. Furt hermore, research surveys have also confirmed how social st rat ificat ion correlat ed t o t he cult ural consumpt ion [2].

Nonet heless, t hose are economic phenomena since it has been direct ly relat ed t o t he concavit y of t he supply and demand curves for part icular product s in t he market , but yet , it is also relat ed t o a deep emot ional and psychological t rait of human species, envy. This is relat ed an int erest ing field relat ed t o behavior economics. Inequalit y has been underst ood t o be one of source of unhappiness among people (cf. [7]). Furt hermore, t he int erest ing relat ions bet w een inequalit y w it h t he st at e of w ell-being or happiness are relat ed t o t he emot ional st at es of human being. As it has been not ed in [13], emot ions serves an adapt ive role in helping organisms deal w it h key survival issues posed by t he environment . Emot ional based decision making among economic agent s might have been one of explanat ion t o t he deviat ion of rat ionalit y in t he sense of convent ional underst anding (cf. [10]), beside t he realizat ions on t he social boundedness on w hich rat ional choices must be t aken ([16] &

[9]).

Recent economic discussions have int roduced a lot of int erest ing discourses relat ed t o t his. The evolut ionary game t heory as harmonious mixt ures bet w een biological st udies, economic behavior, and mat hemat ical t heories on games [17] has out lined some applicat ions int o t he recent problems in economics [5]. One of int erest ing point s are relat ed t o t he formalizat ions of t he social pat t ern regarding t o t he game of t he conspicuous consumpt ion [4]. The discourse of t he evolut ionary game t heoret ic analysis on economic issues, t he emot ional based economic decision making as w ell as t he boundedly rat ional agent based model employment in comput at ional analysis are t hose becoming main issues mot ivat ed t he paper.

The paper is begun w it h t he discussions relat ed t o t he overview of t he mat hemat ical models relat ed t o t he conspicuous consumpt ions. M ost development of t he model has been explored in t he fashion of analyt ically evolut ionary game t heoret ic models. Discussions are cont inued t o t he implement at ion of t he models for w ider t heoret ical explorat ions by incorporat ing t he acquisit ions of comput at ional simulat ions. By t he end of t he paper, some demonst rat ions of t he t oy model are present ed w it h some out lines t o some conject ures in furt her development .

2. Overview of the M odel

The present at ion of t he paper show s lat t ice-based populat ions as landscapes reflect ing t he allocat ions of ordinary and conspicuous expenses by economic agent s. As described in [8], t he lat t ice based populat ions, or more generally t he neighborhood st ruct ure usually “ t ends t o favor t he long- t erm co-exist ence of st rat egies w hich w ould not co-exist in w ell-mixed populat ions” . This is t he dynamics as once int roduced in [1, 6] and t hus implement ed in cult ural disseminat ion model [12], and also used as model t o discover some dynamical charact erist ics in corrupt ion [14]. The plat form is part icular kinds of agent based model [11] in w hich w e ut ilize as comput at ional experiment s media. Anot her similar previous w ork relat ed t o advert ising could also w ort h for ment ion [15].

Imagine a landscape w here people are represent ed on lat t ices and grids. Each agent is given t he same amount of money, and it is on t heir decision t o allocat e an

x = (0,1]

amount of t he money for ordinary necessit ies. While t he savings and invest ment s are neglect ed, t he

1 − x

fract ion of t he money is t hus allocat ed for luxurious expendit ures. The lat er expense is t hus becoming t he source of envy among economic agent s, t hings t hat influence t heir apprehension on t heir surroundings and t hus give impact t o t heir decision making. Thus, t he expect ed pay off on each round of t he game t hus depends on each agent ’s ordinary consumpt ion (

u

) and her allocat ion of for t he conspicuous consumpt ion (

U

),

U cu

ϕ = +

₍₁₎

w here

c ≥ 0

denot es t he const ant marginal rat e subst it ut ion. The ordinary consumpt ion can be st at ed as a concave ut ilit y funct ion,

ln

cu = c x

_{, (2)}

and as

x → 0

^{w e have}

ϕ → −∞

reflect ing t he import ance of t he ordinary consumpt ion, w hile t he ut ilit y funct ion due t o ordinary expenses w ould be

cu ∈ −∞ ( , 0]

- a fact t hat no one w ill complet ely neglect s t he ordinary consumpt ion expect for t he limit ing case of

c = 0

^.

The main of t he focus in t he game is t hus t he conspicuous consumpt ion: how much is t he fract ion needed t o sat isfy t he social effect of envy w hen ot her surrounding people have more (or less) fract ion for t he conspicuous expenses. An evolut ionary modeling of t his has been analyt ically analyzed by t he calculat ing t he gradient dynamics in t he fashion of cumulat ive dist ribut ion of funct ion [4].

Our approach in t he paper is relat ed t o t he implement at ion of t he models show ing t he economic behavior as point ed out in [19] as consumpt ions of t he excellent goods t hat is socially relat ed t o t he evidence of w ealt h. In t his game, if an economic agent compare her allocat ed expenses for excellent goods is bigger t han ot her, she w ould be in t he psychological st at e of envy – a t hing t hat mot ivat es her t o allocat e bigger consumpt ion if t hey int eract again in t he fut ure. This envy how ever must be const rained due t o her allocat ion of ordinary consumpt ion w hich is a necessit y and cannot be

4

nullified. Here, w hen an agent allocat es a fract ion of

x

t o t he ordinary consumpt ion (t hus allocat e a fract ion of

(1 − x )

for conspicuous one) and find out t hat ot her agent t hat int eract s w it h her pay t he fract ion of

y < x

for t he same respect ive expendit ures (t hus

(1 − y )

for excellent goods), t hen she w ill have disut ilit y in t he proport ion of

( , ) min{0, ( )}

r x y = y − x

⁽³⁾

In t he analyt ical model as proposed by [4], t he payoff can be w rit t en,

1

0 0 0

( , ) ( , ) ( ) ( ) ( ) ( )

x x

U x D = ∫ r x y dD y = ∫ y − x dD y = − ∫ D y dy

⁽⁴⁾

w here

D y ( )

is t he cumulat ive dist ribut ion funct ion of ot her’s decision on t he fract ion t o t he ordinary consumpt ion and give us a consequence t o t he t ot al payoff of an agent ,

0

( , ) ln ( )

x

x D c x D y dy

ϕ = − ∫

^{. (5)}

It is easy t o see t hat t hat in t he limit ing case

0

( ) 0

x

D y dy =

∫

, a corresponding agent t hat allocat es sufficient ly small amount of

x

for ordinary consumpt ion get s t he maximum payoff relat ed t o her envy t o ot hers. The gradient dynamics, on w hich agent s adjust t he value of

x

is.

x

( )

c D x x x ϕ ∂ = − ϕ

@ ∂

₍₆₎

Figure 1. The landscape of allocat ion for ordinary consumpt ion aft er t he rule of envy is implement ed for T=250 rounds

3. Experiments w ith spatially-bounded agents

A numerical simulat ions is conduct ed in [5] in order t o see t he possible st able equilibria of t he problems by a discret izat ion of equat ion (5) in such a w ay,

1 1

ln ln 1

N N

i i

i i

c x F x c x F

ϕ N

= =

= − ∑ ∆ = − ∑

⁽⁷⁾

Wit h t he gradient as analyt ically show n in eq. (6),

n n

n

c F

ϕ = x −

₍₈₎

w here

F

_i denot es t he cumulat ive dist ribut ion funct ion obt ained from t he numerical int egrat ion of t he probabilit y measure

f

_i in t he

i

-t h int erval among

1 N

i i

k

F f x

=

= ∑ ∆

⁽⁹⁾

as

f

_i is t he average densit y of

M

number consumers w it h st rat egies divided in

∆ x

^equal

N

number of int ervals, as t o

1

x N

∆ =

. Consequent ly, w e have

F x (

₀

) = 0

and

F x (

_N

) = 1

, a sort of rank among w hole agent s – from w hich t he name rank dependent consumpt ion came from.

When t he focus of our at t ent ion is t he mult iple equilibria, t his approach has given int erest ing result s. Yet , anot her perspect ive can also be offered relat ed t o t he economic agent ’s boundedness relat ed t o t he conspicuous consumpt ion. In realit y, t he people are “ t rapped” in social surroundings in w hich envy and vanit y is sourced upon cognit ively. People do not have t o compare his expendit ures w it h t hose he w ould only “ meet ” on t elevision, but people t hat are socially relat ed t o t hem.

Figure 2. Different average equilibra at different values of c.

Thus, cells or view is mor t he ri neighb t ot al n t he se as,

( , i j ϕ

w here neighb On an

( , x i j t

w here consu payoff her nei

s, w e t ransform or square is more lik right grid hborhood l neighbors, set of st rat

, , ) ln i j t = c

re

x

_N

υ is hbors, inde any

, , 1) i j t + =

re

' x i (

_{Nυ Nυ}

‹

“ ›

« fi

sumpt ion.

ayoff is larger r neighbors’

nsform t he are lat t ices

like a t orus grids w it h t

d (w it h conn ors,

[ ] ^N

υ

=

t rat egies

x

[

ln ( , , c x i j t

=

is t he decis ndexed as

N

  + = 



( ^,

x i

(

' x i ‹

“ ›

« fi

( i

_Nυ

, j

_Nυ

, ) t

' ‹

“ ›

« fi

n. Thus, an er t han t he ors’ decision

t he discret iz s locat ed at t orus: t he low

t he left connect ions

= 8

^{). In e}

(0, ] x ∈ ∞

] ¹

, )

N

j t λ

= + ∑ −

cision of n

{1, 2 N

_υ

=

)

, , , (

i j t ϕ i ϕ

(

_N

,

_N

, ) x i j t

υ υ

' ‹

“ ›

« fi

, )

N

j t

υ

' ‹

“ ›

« fi

^{is t h}

an agent w o t he average ons for ordi

Fig

t izat ion as d at a t w o low est t w o ft one. T

ns bet w ee each t ime

∈ , ] ∞

^{and as an}

) ( , ,

N

t x i j

υ

 

+ ∑  − 

neighbors

1, 2,...,8}

, t

( , , ) i j t

ϕ < ' ϕ ‹

“ ›

« fi

, ) , t

N

oth

υ

' ‹

“ ›

« fi

t he averag t w ould st a age payoff of rdinary con

Figure 3. Ag

as suggest e t w o-dimensio st t w o-dimensio The myop een nearest

me st ep

t T

an adapt at

, , ) j t x i (

_{N N}

 

+  − 

ors for ordi , t hat has ma

) (

_N

,

_N

t i j t

υ υ

ϕ < ' ϕ ‹

“ ›

« fi

otherwise

rage of t he st ay w it h t ayoff of her nei ary consumpt ion

Agent s’ equili st ed in eq.

sional virt u sional grids ar myopic agen

arest and ne

1, 2,...,

t = T

t at ion of eq.

( i

_N

, j t

_N

)

υ υ

 

 

rdinary con as made t he

, , )

N

j

N

t

N

υ υ

υ

' ‹

“ ›

« fi

se

t he averag t he same eighbors a ion ot herw

ent s’ equilibrium po

q. (7) int o r rt ual w orld ids are past ent s evaluat

next -nearest

t ..., T

, every eq. (1), (3)

, )

 

 

consumpt ion he respect i

' ‹

“ ›

« fi

verage deci same fract ion ors and chang

rw ise.

rium point s for c=

represent at w orld of

i j , = L

ast ed t oget luat e t heir rest neighb ry agent ev (3) and (4),

(10)

ion and

λ

ct ive agent

(11)

ecision of ion of ordi nge her de

c=0.1

nt at ion of

, j = 1,..., L

et her w it h t eir payoffs hbors, t hus evaluat es

), w e can w r

10)

λ

^{denot es}

nt envious,

11)

of neighbors ordinary con

decision int o of agent s p

w hile t he t h t he highe ayoffs in t he

hus each ag s her payoff n w rit e t he

t es t he num s,

x t ( ) < y t

bors for or onsumpt ion int o t he ave

6

placed in t he global ghest , and e M oore agent has ayoff from he pay off

number of

) y

_N

( ) t

<

υ ^.

ordinary ion if her average of n al nd e s m off

of

y er of

4. Computational Experiments From

among condu simulat consu st rat e averag subst i consu

One of social int erv for

c

equilib higher a Int ere end of higher agent s), becom

. Computational Experiments From t he mod

ng agent s nduct ed in

ulat ive proc sumpt ion a st rat egies for mor

rage allocat st it ut ion (

c

sumpt ion s

of int erest ial classes.

rvals in w h

0.1 c =

^{is s}

ilibrium po er and low rest ingly, t of rounds

er allocat io nt s), w hile come a uniqu

. Computational Experiments model, w e ca

t s due t o t h n square lat t

rocess is s and t hus aft for more. The

ocat ion of or

c

). It is cle should be

Figure 4. T

est ing t hing s. It is w ort hich agent s is show n in

point near ow er profile y, t his can a nds of simulat cat ion for or

ile most of unique prop

. Computational Experiments can do co t heir alloca lat t ices o s show n in

s aft er rou he not -cha ordinary c clear t hat be allocat ed.

The emergen

ing t hat w e ort h t o not e ent s st op ch in figure 3.

ar t he value rofile agent s. T

also be vis ulat ion, it i ordinary co of agent s ar opert y t hat

comput at i llocat ions of of

L = 30

in figure rounds of sim

hanging st at ary consumpt

at t he high at ed.

rgence of so show s

w e can lear ot e t hat t h changing t 3. How ever,

lue of t he a t s. Thus, t he visualized a it is obvious consumpt i t s are in t he

at w e coul

t at ional exp of ordinary

30

for

T

e 1: t he in simulat ion st at es refle pt ion as sh gher t he va

f social class s t he high, l

arn from o t he averag g t heir allocat ever, it is int e he average a

t he equilibr d as t he clu us t hat t he pt ion (i.e.:

t he st at e of uld have g

xperim ent s ary and con

250 T =

^ro

init ial rand on st ay at e flect t he equ show n in f value of

c

cial class: t he allocat i gh, low profile agent s.

our simulat rage value locat ion for nt erest ing t o e as some l ilibria is show

clust ered ag t here are som .e.: low er prof

of medium gained from

nt s t hat w o conspicuous rounds of random cond at equilibria

equilibrium n figure 2 for

c

, t he mor

t he allocat ion for o file agent s.

ulat ion is t e as show n for ordinary g t o see t hat e less agen

ow n t o be agent s spat some clust

rofile agen ium class of

from t he com w ould reve

us consump of games condit ion of ria w hen age um and can

2 for variou more fract io

r ordinary c

s t he emerge w n in figur ary consum t hat most of ent s are kee

e in a kind spat ially as lust ered age

ent s), low e of ordinary comput at

eveal t he u umpt ions. O

s w it h var of allocat agent s do n can be seen

ious value fract ion of incom

dinary consumpt i

ergence of ure 2 cam umpt ion. O most of agent s

keeping t h nd of int erv as show n in agent s t o b ow er one (i.e.

ary consum t at ional age

Clust er

Clust ers

unique equ . Our simul ariable

c =

ocat ion t o or o not chan een on t he co

ue of margi ncome t o or

nsumpt ion

of spat ially came from a One of t he t s are findi t heir st at u

rval.

in figure 4 be in t he i.e.: higher sumpt ion. T agent -based ust ers of low er

ust ers of highe

equilibria ulat ion is

.1 c =

^{. The}

ordinary ange t heir e const ant marginal rat e t o ordinary

lly locat ed a sort of he result s nding t heir st at us as t he

4. At t he e st at e of er profile n. This has ed model ow er profile

gher profile ia is e ary eir t e y

ed of eir e

e of le as del ile

from t of eco consu and low

From lucky are se accum consu locat io in suc our sim accum t hroug

t he model economic c sumpt ion in low er prof

From our simu cky enough t

set or at le umulat ed p sumpt ions.

ocat ions filled uch w ays e simulat ion umulat ed p

ughout t he

among agent s del as int ro c classes b in t he st at rofile agent s amo

Figure 5.

mulat ion, w h t hat t hey at least t hey payoff rel s. Obvious lled w it h suc ys emerging ons. Those payoffs t t he spat ial l

Fig ng agent s t hro high pay off

low pay off

t roduced in based du st at e of mu ent s among

. The landscape

are filled w it h agent s w h

, w e could ey have alr ey have ne relat ively usly, t he e uch lucky ag ing t he spat

se agent s ar t here w o al landscape

Figure 6. Th t hroughout t he c

ay off

pay off

in eq. (5) a due t o t h mult iple equ

g t he sea of a

e landscape of pay led w it h agent s w h

ld also obs already clos neighbors w y higher t h

emergent cky agent s. Ro

at ially clust t s are clust e w ould be

pe relat ed

The equilibri ut t he comput at i

) and (6). Fr t heir profile equilibria:

a of averag

payoff aft er

ed w it h agent s w hose higher accumula

observe som lose enoug ors w it h such

t han t he nt spat ial p Rounds by lust ered ag st ered one e such gra ed t o t he op

equilibrium point s as mput at ional simulat i

). From t he rofile in t hei

a: t here are rage profile

t er T=250 ro se higher accumula

some int er ugh t o t he uch allocat i e ot hers. F l pat t erns by rounds i agent s w hos

e anot her gradat ion.

opt imum a

int s as t he at t ract nal simulat ion.

he big pict u t heir allocat are “ islands”

le persons.

rounds: t he darker t he se higher accumulat ed pay

erest ing as e equilibri ocat ions of or

. Figure 5 s are show s in our sim

hose relat ivel er and t o t n. This refl m and best fract

t he at t ract ors based on. The int er

ct ure, t here ocat ion t o nds” repres

s.

t he darker t he se higher accumulat ed payoffs

aspect s sp ria w hen t ordinary c 5 show s t ow n here.

simulat ions at ively high

t he clust e eflect s t he st fract ion of or

based on en he int erval of t he equili

re has bee t o ordinary

esent ing t h

t he darker t he red cells s.

spat ially. Som n t he random ary consumpt ow s t his in o

e. In t he fig ns t hey acc igher payoffs st ered agen he diffusion n of ordinary

n envy

f t he equilibria is sh been an eme

ary and lu t he higher

cells

. Some age ndom init ial pt ion. Thos our landsca figure, dark accumulat e ayoffs at t he ent s w hos ions of st rat nary consum

ria is show n.

8

mergence luxurious er profile

agent s are ializat ions hose have ndscape of arker red at e payoffs he end of ose low er st rat egies sum pt ion.

w n.

e s ile

e s ve f ed ayoffs f r s

How ever, t he process of t he diffusions along t he rounds of our comput at ional simulat ions can be seen vaguely in t he phase map corresponding t o t he mapping of

x t ( ) → x t ( + 1)

. This is show n in t he figure 6.The random init ializat ion has been at t ract ed t o t he int ervals of equilibria. This is a sort of at t ract or of envy. What ever t he init ial st rat egies, t hey w ill alw ays be at t ract ed t o t he int ervals as show n in figure 3, and t he equilibrium st rat egy decided by agent s are t hus relat ed direct ly t o t heir respect ive spat ial posit ions i.e.: in w hat kind of neighborhood she is placed upon. Thus w e have demonst rat ed t hat t he evolut ionary processes do not only depend upon t he st rat egies t hat are being used in t he games but also t he respect ive posit ions of t he st rat egic occupant s.

5. Concluding Remarks

We have show n t he discussions incorporat ing t he comput at ional agent based models of t he game on allocat ing ordinary and conspicuous consumpt ions among economic agent s. While t he t ask came from one of t he proxy of t he evolut ionary (economics) game t heory, t he present at ion is based on an implement ed fashion of comput at ional sim ulat ions. The lat t er has been enriched t he w orks on t he boundedness of agent s due t o t he myopic evaluat ions of agent s on t heir neighborhood and some spat ially emerged fact s w hile m acro-view equilibria have been reached over rounds of simulat ions.

An int erest ing result is show n relat ed t o t he varying, yet clust ered populat ions and an at t ract or of envy on t he landscape of allocat ions bet w een ordinary and conspicuous consumpt ion. While t he size of t he allocat ion for conspicuous consumpt ion is relat ed t o t he economic profile of agent s, it is also visually show n in 2-dimensional lat t ices t he em ergence of higher, low er, as w ell as m edium classes of economic profiles.

While in general t he model depict s how emot ional st at e – in t his case, envy – could become a source of t he concavit y of t he demand funct ion, t he promising fut ure w orks could be conject ured t o see how evolut ionary game t heory can be explored for ot her fact ors and variables used by agent s, e.g.

t he development of economic discourse based on psychological behaviors, evolut ionary paradigms on mult iple equilibria, as w ell as comput er simulat ions as t oy models. The furt her w orks on t his research inquiries w ould also be conject ured t o t he recognit ion of psychological aspect s e.g.

happiness or w ell-being-ness, t o t he emerging macro-pat t ern of economic decisions. This is left for fut ure w ork.

Acknow ledgement

Aut hor t hanks Surya Research Int ernat ional for t he provision of financial support in w hich period t he paper is w rit t en. All fault remains aut hor’s.

W orks Cited

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