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Instrumental Cardinal Concerns for Social Status in Two-Sided Matching with Non-Transferable Utility

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  • Ennio Bilancini

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  • Leonardo Boncinelli

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Abstract

In this paper we apply the instrumental approach to social preferences in order to distinguish among various shapes of preferences for social status. In particular, we consider the shape of reduced preferences that emerge in the equilibrium of a two-sided matching model with non-transferable utility. Cole et al. (1992, 1995) show that, under full observability of potential mates’ attributes, instrumental concerns for social status are ordinal, i.e., only one’s own rank in the distribution of attributes matters. We show that when we depart from full observability, instrumental concerns for social status become cardinal, i.e., also other features of the distribution of attributes matter. We also show that the actual shape of cardinal concerns depends on how individuals can deal with the informational asymmetry, alternatively leading to upward concerns – i.e., making comparisons with higher rank people – downward concerns – i.e., making comparisons with lower rank people – or bidirectional concerns – i.e, being both upward and downward.

Suggested Citation

  • Ennio Bilancini & Leonardo Boncinelli, 2014. "Instrumental Cardinal Concerns for Social Status in Two-Sided Matching with Non-Transferable Utility," Center for Economic Research (RECent) 095, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
  • Handle: RePEc:mod:recent:095
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    Cited by:

    1. Frédéric Gavrel, 2016. "Keeping Up with the Joneses as an Outcome of Getting Ahead of the Smiths. A Two-Stage Veblenian Status Game," Working Papers halshs-01319593, HAL.
    2. Frédéric Gavrel, 2019. "One Dynamic Game for Two Veblenian Ideas. Income Redistribution is Pareto-Improving in the Presence of Social Concerns," Working Papers halshs-02083460, HAL.
    3. Aronsson, Thomas & Johansson-Stenman, Olof, 2015. "Keeping up with the Joneses, the Smiths and the Tanakas: On international tax coordination and social comparisons," Journal of Public Economics, Elsevier, vol. 131(C), pages 71-86.
    4. Bilancini, Ennio & Boncinelli, Leonardo, 2019. "Wage inequality, labor income taxes, and the notion of social status," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 13, pages 1-35.
    5. Bilancini, Ennio & Boncinelli, Leonardo, 2020. "When today’s rewards are tomorrow’s endowments: The effects of inequality on social competition," European Economic Review, Elsevier, vol. 129(C).
    6. Haagsma, Rein, 2018. "Income inequality and saving in a class society: The role of ordinal status," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 12, pages 1-31.
    7. Haagsma, Rein, 2018. "Income inequality and saving in a class society: The role of ordinal status," Economics Discussion Papers 2018-12, Kiel Institute for the World Economy (IfW).
    8. Gallice, Andrea, 2018. "Social status, preferences for redistribution and optimal taxation: A survey," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 12, pages 1-17.

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    More about this item

    Keywords

    asymmetric information; matching; social preferences; instrumental approach; social status;
    All these keywords.

    JEL classification:

    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D10 - Microeconomics - - Household Behavior - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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