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A human relations paradox

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  • Gersbach, Hans
  • Haller, Hans

Abstract

We present a variant of a general equilibrium model with group formation to study how changes of non-consumptive benefits from group formation impact on the well-being of group members. We identify a human relations paradox: Positive externalities increase, but none of the group members gains in equilibrium. Moreover, a member who experiences an increase of positive emotional benefits in a group may become worse off in equilibrium.

Suggested Citation

  • Gersbach, Hans & Haller, Hans, 2013. "A human relations paradox," Mathematical Social Sciences, Elsevier, vol. 65(2), pages 154-156.
    • Handle: RePEc:eee:matsoc:v:65:y:2013:i:2:p:154-156
    DOI: 10.1016/j.mathsocsci.2012.08.004
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    1. Andrew Postlewaite, 1979. "Manipulation via Endowments," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 255-262.
    2. Jagdish N. Bhagwati, 1968. "Distortions and Immiserizing Growth: a Generalization," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 35(4), pages 481-485.
    3. Gersbach, Hans & Haller, Hans, 2011. "Groups, collective decisions and markets," Journal of Economic Theory, Elsevier, vol. 146(1), pages 275-299, January.
    4. Jagdish Bhagwati, 1958. "Immiserizing Growth: A Geometrical Note," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(3), pages 201-205.
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    Cited by:

    1. Hans Gersbach & Hans Haller, 2018. "Power at general equilibrium," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 50(3), pages 425-455, March.

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    More about this item

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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