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Status competition and benevolence in social networks

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  • Yao-Yu Chih

Abstract

Motivated by recent studies of network analysis, we explore the consumption externality that results from the interdependence of asymmetric preferences. In addition to the positional externality that results from jealousy or from the desire to leapfrog peers, we assume that agents are mutually benevolent, i.e., they are concerned about general welfare. Two contrasting scenarios, limited status competition and extensive status competition networks, are examined. Both these network structures suggest that social welfare improves in the presence of benevolence and that this matters more if the individual is more influential in her network. Finally, we analyse the corresponding policy intervention in response to a reduction in equilibrium overconsumption and overwork levels.

Suggested Citation

  • Yao-Yu Chih, 2018. "Status competition and benevolence in social networks," Oxford Economic Papers, Oxford University Press, vol. 70(1), pages 141-162.
    • Handle: RePEc:oup:oxecpp:v:70:y:2018:i:1:p:141-162.
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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