Economic Letters – 145 (2016) 282-285.
Keywords: Keeping up with the Joneses, Consumption cascades,Heterogeneous
agents, Wealth inequality
Abstract: In the present paper I introduce “keeping up with the Joneses preferences” in an otherwise standard heterogeneous agent economy. The model simulations show that this kind of preferences can generate a substantial increase in wealth inequality compared to an equal model with standard expected utility.