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Role models that make you unhappy: light paternalism, social learning, and welfare

Published online by Cambridge University Press:  12 February 2013

CHRISTIAN SCHUBERT  and
CHRISTIAN CORDES
CHRISTIAN SCHUBERT*
Affiliation:
Institute of Economics, Brandenburg University of Technology, Cottbus, Germany
CHRISTIAN CORDES*
Affiliation:
Faculty of Business Studies & Economics, University of Bremen, Bremen, Germany
*
*Email: [email protected]
**Email: [email protected]
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Abstract

Behavioral (e.g., consumption) patterns of boundedly rational agents can lead these agents into learning dynamics that appear to be ‘wasteful’ in terms of well-being or welfare. Within settings displaying preference endogeneity, it is however still unclear how to conceptualize well-being. This paper contributes to the discussion by suggesting a formal model of preference learning that can inform the construction of non-standard notions of dynamic well-being. Based on the assumption that interacting agents are subject to two biases that make them systematically prefer some cultural variants over others, we develop a procedural notion of well-being, based on the idea that policy should modify institutional conditions that generate dynamic instability in preference trajectories, while leaving individual choice sets unrestricted.

Type
Research Article
Information
Journal of Institutional Economics , Volume 9 , Issue 2 , June 2013 , pp. 131 - 159
Copyright
Copyright © Millennium Economics Ltd 2013

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