Shel and Fran are neighbors. They work at the same firm and hold the same title. Shel finds that when Fran's consumption rises, Shel feels worse off. Fran feels the same way about Shel's consumption. Fran has bought a new Jaguar (a luxury car), and shortly thereafter, Shel bought a new Mercedes (also a luxury car). Shel and Fran seem to be:
A)making independent rational consumption decisions.
B)unaware of the other's actions.
C)involved in a positional arms race.
D)imposing external benefits on each other.

Question

Quizplus · Accepted Answer

Fran and Shel base their happiness on their relative position and each prefers to have more things than the other. When one buys a nice new car, the other one wants a nice new car.

Shel and Fran Are Neighbors