A Social-Status Rationale for Repugnant and Protected Market Transactions
Romans Pancs*, Patrick Harless
Date: 2018-05-12 9:30 am – 10:00 am
Last modified: 2018-05-02
Abstract
Often, individuals deem repugnant and societies proscribe market transactions in sex, organs, and surrogacy, seemingly despite potential gains from trade. We resolve this tension by observing that repugnance norms may help status-conscious individuals. We study an exchange economy in which agents abhor dominance: one loses social status if surpassed by another in the consumption of every good. Repugnance norms forestal dominance by partitioning goods into submarkets and proscribing trade across submarkets. With multiple equilibria, there is scope for coordinating on, or protecting, a good for “overconsumption”; this good (e.g., owner-occupied housing) is an emergent status good.