A model of fads,fashions, and group formation

I develop a model of consumer behavior where agents purchase goods in order to signify personal characteristics. Agents purchase goods in order to imitate agents similar to them and agents they want to emulate. Depending on parameter values of consumer preferences the model generates stable groups, fads, and fashion cycles, or a mixture of both. The model is unique to the economic literature on fads in that the extinction of fads occurs endogenously in the model. © 2004 Wiley Periodicals, Inc. Complexity 9: 51–61, 2004