Networked Consumers

While personal consumption accounts for two-thirds of GDP, recent economic events have emphasized our limited ability to translate consumption patterns into policy. This book analyses the network memberships that emerge from the natural settings of our everyday lives, and the pervasive effects that these can have on our preferences and behavior as consumers. Effects of network memberships are nowhere more evident than in our interactions as consumers. Interaction models in consumption that are in pairwise contacts do not represent the complex interactions in networks and effects that are emergent from these interactions. In the proposed model, feedback from consumer activities to preferences is shown to have properties that increase their openness of effects of environments. These dynamics are shown to imply that there is more randomness than popularly recognized in both the daily lives of consumers and the generation of institutions that emerge from these interactions. The network model is then extended to give a form to effects of clustering that is emergent in networks. Effects of clustering on content overlap in the information that consumers exchange in the network are examined in a computational model. Hierarchical allocation heuristics are also implemented to study consumption and savings under differentiated consumer objectives. In applications, transfers that occur between consumption and work and relate to human capital are considered. Finally, the model of information use by networked consumers is used to indicate effects that consumption of information goods can have on economic growth and welfare.