Role Models that Make You Unhappy: Light Paternalism, Social Learning and Welfare

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 alternative 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, a procedural notion of well-being can be developed, based on the idea that policy should identify and confine conditions that generate dynamic instability in preference trajectories.