Collective consumption models with restricted bargaining weights: an empirical assessment based on experimental data

S. Bruyneel, L.J.H. Cherchye, B. de Rock

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We use experimental data to analyze consumption decisions by groups of individuals who have to reach a consensus on spending a joint budget. Our experiment involves dyads (i.e. two-member groups) who have to compose consumption bundles consisting of three commodities (wine, orange juice and M&Ms). We focus on the collective consumption model to describe group behavior. This model represents group decisions as Pareto optimal outcomes of a within-group bargaining process, with rational group members who are each characterized by individual bargaining weights. We also consider specifications of the collective model that restrict the variation of these bargaining weights. A distinguishing feature of our study is that we use revealed preference testing tools to assess the goodness-of-fit and discriminatory power of alternative specifications of the collective model. Our experimental results suggest that the most appropriate model specification allows for a limited variation of the bargaining weights.
Original languageEnglish
Pages (from-to)395-421
JournalReview of Economics of the Household
Volume10
Issue number3
Publication statusPublished - 2012

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