Introducing social context into economic models: Three essays

The dissertation focuses on introducing behavioral components and social context into economic models and includes three essays. The first essay deals with the social aspects of urban and regional economic problems and applies industrial organization theory to solve these problems. The second essay focuses on the impact of social context on consumer behavior, and represents an interdisciplinary work in behavioral and experimental economics and economic psychology. The third essay considers individual participation in the solution of common (global) problems, which induces other-regarding rather than pure self-interest behavior. The purpose of the dissertation is to develop a theoretical framework and to model individual behavior in social context for three types of decisions: a household choice of a neighborhood, a consumer decision regarding the purchase of goods and services, and a farmer choice of agricultural technologies which contribute to the reduction of the pace of global warming. Theoretical propositions and models\u27 conclusions are tested using survey and quasi-experimental data collected from human subjects. Empirical analysis confirmed models expectations and uncovered additional insides for future research. The theoretical contribution of the first essay is in refining the view on communal associations and their influence on household choice of a neighborhood; and providing a novel framework for the identification of beneficiaries and the welfare analysis of an introduction of an association into the neighborhood. The second essay expands the traditional economics consumer behavior model in two ways: it allows for a co-existence of two utility functions and multiple mental budget constraints. The proposed model is a powerful tool for analyzing and comparing consumer behavior in the presence and absence of social context. The third essay made a contribution by discovering factors which motivate farmers to implement carbon sequestration technologies. The proposed environmental policy recommendations are aimed at decreasing direct financial costs of governmental programs, increasing the pace of carbon retirement, and ultimately facilitating the formation of an effective carbon emissions trading scheme