Non-unitary Models of Household Behavior: A Survey of the Literature

Non-unitary Models of Household Behavior: A Survey of the Literature This article considers non-unitary models of household behavior. These models suppose explicitly that households consist of a number of different members with preferences that are different from each other. They can be split up into two principal categories: cooperative (or collective) models, in which the allocations are supposed to be Pareto efficient; and noncooperative (or strategic) models which are based on the concept of Cournot-Nash equilibrium. The demand functions that describe household behavior in these models are subject to constraints that differ from the traditional Slutsky conditions. In addition, in a certain number of specific cases, the preferences of the different household members can be identified from observable behavior. NON-TECHNICAL SUMMARY This article presents the various approaches recently developed in economics to model the behavior of multi-person households. In these approaches, each member in the household is represented by specific, different preferences. The outcome of the decision process is then the result of a bargaining between household members. Importantly, the theoretical implications of these models differ from what is generally obtained in more traditional models of household behavior. In addition, in a certain number of specific cases, the preferences of the different household members can be identified from observable behavior. JEL Classification: D11, D13, J22