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The Power of Positional Concerns

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  • Benno Torgler
  • Sascha L. Schmidt
  • Bruno S. Frey

Abstract

People 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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  • Benno Torgler & Sascha L. Schmidt & Bruno S. Frey, 2008. "The Power of Positional Concerns," CREMA Working Paper Series 2008-07, Center for Research in Economics, Management and the Arts (CREMA).
  • Handle: RePEc:cra:wpaper:2008-07
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    Cited by:

    1. Markus Schaffner & Benno Torgler, 2008. "Meet the Joneses: An Empirical Investigation of Reference Groups in Relative Income Position Comparisons," School of Economics and Finance Discussion Papers and Working Papers Series 234, School of Economics and Finance, Queensland University of Technology, revised 17 Jun 2008.
    2. Zeballos, Eliana, 2015. "Getting a Leg Up or Pulling it Down? Interpersonal Comparisons and Destructive Actions: Experimental Evidence from Bolivia," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205660, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    3. 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.
    4. Zeballos, Eliana, 2015. "Getting a Leg Up or Pulling it Down? Interpersonal Comparisons and Destructive Actions: Experimental Evidence from Bolivia," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206857, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    5. Martin Gachter & David A. Savage & Benno Torgler, 2009. "Retaining the Thin Blue Line: What shapes workers' willingness not to quit the current work environment?," School of Economics and Finance Discussion Papers and Working Papers Series 253, School of Economics and Finance, Queensland University of Technology, revised 28 Oct 2009.

    More about this item

    Keywords

    Relative income; positional concerns; organizational justice; envy; social comparison; relative derivation; equity theory; prospect theory; loss aversion; performance;

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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