Abstract
A formal definition of multi-member households and their decision-making criteria is provided. Commodities are modeled as private goods that are consumed by individual household members. Individuals have their own consumption and preferences. Household members may experience consumption, group and endowment externalities. As a rule, households adhere to collective rationality, making efficient consumption decisions for their members under the household budget constraint.
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We enumerate and formulate characteristics of consumers and households.
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We distinguish households from clubs.
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We discuss the pros and cons of the collective rationality assumption.
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Notes
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This theme has been developed in Gersbach and Haller (2004).
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Gersbach, H., Haller, H. (2017). Households. In: Groups and Markets. Springer, Cham. https://doi.org/10.1007/978-3-319-60516-6_3
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DOI: https://doi.org/10.1007/978-3-319-60516-6_3
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