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Status in Markets

Author

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  • Sheryl Ball
  • Catherine Eckel
  • Philip J. Grossman
  • William Zame

Abstract

This project tests for the effect of social status in a laboratory experimental market. We consider a special "box design" market in which a vertical overlap in supply and demand ensure that there are multiple equilibrium prices. We manipulate the relative social status of our subjects by awarding high status to a subset of the group based on one of two procedures. In the first, a subject's score on a trivia quiz determines his or her status; in another, subjects are assigned randomly to a higher-status or lower-status group. In both treatments we find that average prices are higher in markets where higher-status sellers face lowerstatus buyers, and lower when buyers have higher status than sellers. Across all sessions, the higher-status side of the market captures a greater share of the surplus, earning significantly more than their lower-status counterparts.

Suggested Citation

  • Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status in Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 161-188.
  • Handle: RePEc:oup:qjecon:v:116:y:2001:i:1:p:161-188.
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    File URL: http://hdl.handle.net/10.1162/003355301556374
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    References listed on IDEAS

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