In solving choice problems under bounded rationality, one relies on "heuristics" provided by social interdependence. Such "heuristics" consist in taking a particular social group as a reference group and in emulating its life-style by acquiring an associated cluster of complementary wants. A preference map generated by this reference-group-taking behavior exhibits smooth indifference curves which are convex to the origin with a "relevant range" over which the marginal rate of substitution is positive and diminishing. However, its implications on consumer choice and welfare economics are significantly different from those of traditional theory.

In solving choice problems under bounded rationality, one relies on "heuristics" provided by social interdependence. Such "heuristics" consist in taking a particular social group as a reference group and in emulating its life-style by acquiring an associated cluster of complementary wants. A preference map generated by this reference-group-taking behavior exhibits smooth indifference curves which are convex to the origin with a "relevant range" over which the marginal rate of substitution is positive and diminishing. However, its implications on consumer choice and welfare economics are significantly different from those of traditional theory.