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Social Capital and the Status Externality

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Title: Social Capital and the Status Externality
Authors: Itaya, Jun-ichi1 Browse this author →KAKEN DB
Tsoukis, Chris2 Browse this author
Authors(alt): 板谷, 淳一1
Tsoukis, Christopher2
Keywords: social capital
status externality
Markov perfect equilibrium
differential game
Issue Date: 7-Dec-2017
Publisher: Faculty of Economics and Business, Hokkaido University
Journal Title: Discussion Paper, Series A
Volume: 318
Start Page: 1
End Page: 36
Abstract: This paper investigates how the presence of social capital affects the externality arising from status-seeking preference as a parable for inefficient antagonistic behavior. It is assumed that the stock of social capital is accumulating through joint social interaction between rational individuals who are forward looking. Using a differential game, we show that although the presence of social capital mitigates the tendency of overconsumption over time, social capital ends up declining to zero. It is also shown that the benefits from social capital enhance the motivation of individuals to accumulate social capital thereby leading to deter overaccumulation and thus possibly improving social welfare.
Type: bulletin (article)
Appears in Collections:Discussion paper > Series A

Submitter: 板谷 淳一

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