Private versus public consumption within groups: testing the nature of goods from aggregate data

Abstract

We study the testability implications of public versus private consumption in collective models of group consumption. The distinguishing feature of our approach is that we start from a revealed preference characterization of collectively rational behavior. Remarkably, we find that assumptions regarding the public or private nature of specific goods do have testability implications, even if one only observes the aggregate group consumption. In fact, these testability implications apply as soon as the analysis includes three goods and four observations. This stands in sharp contrast with existing results that start from a differential characterization of collectively rational behavior. In our opinion, our revealed preference approach obtains stronger testability conclusions because it focuses on a global characterization of collective rationality, whereas the differential approach starts from a local characterization.

Luxury brand attachment: Predictors, moderators and consequences

“…The nature of a product could also impact consumer evaluations and intentions towards the product. There is an increasing consensus that the evaluations and choices for the products often depend on the private versus public context of the consumption (e.g., Cherchye et al, 2013;Krishna et al, 2019;Talukdar & Yu, 2020).…”

“…The nature of a product could also impact consumer evaluations and intentions towards the product. There is an increasing consensus that the evaluations and choices for the products often depend on the private versus public context of the consumption (e.g., Cherchye et al., 2013; Krishna et al., 2019; Talukdar & Yu, 2020). Studies suggest that consumers are concerned about face‐saving for publicly consumed products, and they tend to be thrifty for privately consumed products (e.g., Lin et al., 2013; Shimul et al., 2021).…”

Positively-homogeneous Konus-Divisia indices and their applications to demand analysis and forecasting

“…For treatment of the model of collective consumption when one explicitly model total household consumption as the result of decisions made by its members see (Cherchye et al, 2013(Cherchye et al, , 2011(Cherchye et al, , 2012. For developments in revealed preference techniques for applications other than rationalizability of consumer behavior on consumption commodities markets see (Carvajal et al, 2013;Echenique et al, 2013;Varian, 2012).…”