Relational goods, private consumption and social poverty traps in an evolutionary game

We investigate how the patterns of consumption and accumulation, as well as the patterns of time allocation and of social interaction, may be influenced by ‘social pressure’, i.e., by the choices of others. We display an evolutionary model involving several generations of interacting individuals, in which different patterns may coexist in equilibrium and in which path dependence and critical mass effects play an important role. Bomze’s (1983) classification is used to study the properties of this game. We find that ‘social pressure’ may lead to ‘low welfare traps’ with overwork and overconsumption, and that policy may have a role as a coordination device. JEL-Classification: B52, D62, E21, J22, Z13 Key-words: Social interaction, Relational goods, Coordination failure ∗DEIR, University of Sassari, Sassari, Italy; email: [email protected] †DEIR, University of Sassari, Sassari, Italy; email: [email protected] ‡DEE, UPF, Barcelona, Spain, and DSE ‘Marco Fanno’, University of Padua, Via del Santo 33 – I-35123 – Padova (PD), Italy; email: [email protected] (corresponding author)