We present a model of induction, where the decision maker (DM) infers the unknown properties of an object from information about other objects. We show that categorization is an optimal solution to the prediction problem: The DM classifies objects into groups and her predictions of the object's...

We explore the dynamics of demand for n designs of a good when agents have preferences for (anti-)conformity. Agents differ in their social status and each agent seeks to imitate those of higher status and to distinguish herself from those of lower status, relative to her own status. In each...