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Why do people care about social status?

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  • Rege, Mari
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    Abstract

    This paper shows that complementary interaction can induce people to care about social status because it serves as a signal of non-observable abilities. There is a unique separating equilibrium in which everyone cares about social status. In this equilibrium a person's social status perfectly reveals his abilities, and everyone matches with a person of like ability. The analysis shows that people's instrumental concern for social status has important welfare and policy implications. Indeed, peoples' efforts to "keep up with the Joneses" may be welfare enhancing.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

    Volume (Year): 66 (2008)
    Issue (Month): 2 (May)
    Pages: 233-242

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    Handle: RePEc:eee:jeborg:v:66:y:2008:i:2:p:233-242

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    Web page: http://www.elsevier.com/locate/jebo

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    Cited by:
    1. Jana Friedrichsen & Dirk Engelmann, 2013. "Who Cares for Social Image? Interactions between Intrinsic Motivation and Social Image Concerns," CESifo Working Paper Series 4514, CESifo Group Munich.
    2. Rogério Mazali & José Rodrigues-Neto, 2011. "Dress to Impress: Brands as Status Symbols," ANU Working Papers in Economics and Econometrics 2011-567, Australian National University, College of Business and Economics, School of Economics.
    3. George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2013. "Premuneration Values and Investments in Matching Markets," PIER Working Paper Archive 13-060, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    4. Larbi Alaoui & Alvaro Sandroni, 2013. "Predestination and the Protestant Ethic," Working Papers 679, Barcelona Graduate School of Economics.
    5. Lombardo, Vincenzo, 2012. "Social inclusion and the emergence of development traps," MPRA Paper 36766, University Library of Munich, Germany.
    6. Ed Hopkins, 2006. "Job Market Signalling of Relative Position, or Becker Married to Spence," Levine's Bibliography 321307000000000553, UCLA Department of Economics.
    7. Larbi Alaoui & Alvaro Sandroni, 2013. "Predestination and the Protestant ethic," Economics Working Papers 1350, Department of Economics and Business, Universitat Pompeu Fabra.
    8. George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2011. "Pricing and Investments in Matching Markets," Levine's Working Paper Archive 786969000000000162, David K. Levine.
    9. Bidner, Chris, 2010. "Pre-match investment with frictions," Games and Economic Behavior, Elsevier, vol. 68(1), pages 23-34, January.
    10. Perez Truglia, Ricardo Nicolas, 2007. "Conspicuous consumption in the land of Prince Charming," MPRA Paper 22009, University Library of Munich, Germany, revised 22 Mar 2010.
    11. Dreyer, Johannes K. & Schneider, Johannes & Smith, William T., 2013. "Saving-based asset-pricing," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3704-3715.
    12. Friedrichsen, Jana, 2013. "Image concerns and the provision of quality," Discussion Papers, Research Unit: Market Behavior SP II 2013-211, Social Science Research Center Berlin (WZB).

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