A model of fashion: Endogenous preferences in social interaction

The aim of this paper is to investigate the dynamics of the fashion cycle as originally described by Simmel (1904). The theoretical models used in the more recent economic literature (Coelho and McClure, 1993; Corneo and Jeanne, 1997; Karni and Schmeidler, 1990; Matsuyama, 1992; Stigler and Becker, 1977) have the undeniable advantage of making the cycle widely applicable, and consequently appropriate for the analysis of the most varied fields of consumption activity. However, in the process, the originality of Simmel's thought has been lost. Since they are built on the principles of standard economics, the above-mentioned models generally assume that preferences are exogenous and overlook the fact that individual tastes change in time, partly in line with choices previously made by the social group. The present paper proposes a model of the fashion cycle in which conspicuous consumption 'snob' and 'bandwagon' preferences (Leibenstein, 1950) are determined endogenously and depend on previous consumption experience, both personal and that of other consumers. Thus the particular contribution of this work in comparison to the preceding economic literature is dual in nature. By assuming preferences to be endogenous, it reflects more accurately the dynamics causing perpetual motion in the fashion cycle. By assuming preferences to be shaped through the social interaction of a heterogeneous community of individuals, the model manages to identify more closely the psycho-sociological nuances that, according to Simmel, give rise to the cycle.