Experimental & Behavioural Economics Seminar - Evan Piermont (Royal Holloway - London)

Room 315, Level 3, FBE Building, 111 Barry Street, Carlton

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Siqi Pan

siqi.pan@unimelb.edu.au

Title: Image Conscious Preferences

Abstract: An image conscious decision maker (DM) cares not only about the physical consequences of his actions, but also how his actions are perceived by others. When a DM takes a choice, the resulting image is the set of preferences that are consistent with the observed choice. Image consciousness nests both shame driven preferences (wanting to conceal information) and signaling via consumption (wanting to reveal information; e.g., conspicuous consumption). This paper axiomatizes the behavior of a DM who derives utility directly via consumption and also via the induced image. Because the image depends on what could have been chosen, the DM will display menu-dependent preferences. I consider two models: in the first, the modeler observes two stages of choice—over menus and then from the chosen menu; in the second, only the latter choices are observed. The two models share the same representation but uniqueness is obtained only in the first.