Ordinal vs cardinal status: Two examples
We demonstrate that in models where agents have concerns for status the model predictions can drastically change depending on whether status is modelled as an ordinal or cardinal magnitude. As a proof, we show that two well known theoretical findings are not robust to the substitution of ordinal status with cardinal status [Frank, R.H., The Demand for Unobservable and Other Positional Goods. American Economic Review, (75):101-116, 1985.] and viceversa [Clark, A. and Oswald, R.J., Comparison-Concave Utility and Following Behavior in Social and Economic Settings. Journal of Public Economics, (70):133-155, 1998.].
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