Fashion and wealth accumulation
This paper considers an economy with two groups of agents and models fashion as an externality generated by a dependence of individual agents' time preference on the two groups' per-capita consumption habits. In contrast to the earlier models of time preference, this paper postulates that an agent's discount rate depends only on per-capita consumption habits rather than on the agent's own consumption or habit. It is shown that stronger and more persistent fashion is more likely to generate limit cycles in wealth.
scientific article; zbMATH DE number 1347760