The Power of Positional Concerns
AbstractPeople care a great deal about their relative economic position and not solely about their absolute economic position. However, behavioral evidence is rare. This paper provides evidence on how the relative income position affects professional sports performances. Our analysis suggests that if a player?s salary is below the average and this difference increases, his performance worsens. Moreover, the larger the income differences, the stronger positional concern effects are observable. We also find that the more the players are integrated, the more evident a relative income effect is. Finally, we find that positional effects are stronger among high performing teams.
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Bibliographic InfoPaper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2008-07.
Date of creation: Apr 2008
Date of revision:
Relative income; positional concerns; organizational justice; envy; social comparison; relative derivation; equity theory; prospect theory; loss aversion; performance;
Other versions of this item:
- D00 - Microeconomics - - General - - - General
- D60 - Microeconomics - - Welfare Economics - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-21 (All new papers)
- NEP-CBE-2008-04-21 (Cognitive & Behavioural Economics)
- NEP-HAP-2008-04-21 (Economics of Happiness)
- NEP-HPE-2008-04-21 (History & Philosophy of Economics)
- NEP-SOC-2008-04-21 (Social Norms & Social Capital)
- NEP-UPT-2008-04-21 (Utility Models & Prospect Theory)
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- Reiner Eichenberger & David Stadelmann, 2009. "Who Is The Best Formula 1 Driver? An Economic Approach to Evaluating Talent," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 39(3), pages 389-406, December.
- David Stadelmann & Reiner Eichenberger, 2008. "Wer ist der beste Formel 1 Fahrer? Eine ökonometrische Talentbewertung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(4), pages 486-512, November.
- Liam J. A. Lenten, 2009. "Towards a New Dynamic Measure of Competitive Balance: A Study Applied to Australia’s Two Major Professional ‘Football’ Leagues," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 39(3), pages 407-428, December.
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