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Concern for relative position, rank-order contests, and contributions to public goods

  • Zenginobuz, Unal

We study the consequences of concern for relative position and status in a public good economy. We consider a group of agents who are engaged in a contest for position whereby a set of rewards are distributed according to relative status. The extent of concern for rewards, together with the relative magnitude of rewards, will have an impact on agents’ willingness to contribute to public goods. Depending on the nature of prizes, i.e. whether higher private good consumption is rewarded or punished, the contest for relative position will either exacerbate or ameliorate the free-riding problem inherent in public good environments. In addition to examining the implications of concern for relative position, we also consider how an appropriate scheme of rewards might be designed to induce more efficient levels of public good.

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File URL: https://mpra.ub.uni-muenchen.de/388/1/MPRA_paper_388.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 388.

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Date of creation: Jul 1996
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Handle: RePEc:pra:mprapa:388
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  1. Paul Milgrom & Robert Weber, 1981. "Distributional Strategies for Games with Incomplete Information," Discussion Papers 428R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Bakshi, Gurdip S & Chen, Zhiwu, 1996. "The Spirit of Capitalism and Stock-Market Prices," American Economic Review, American Economic Association, vol. 86(1), pages 133-57, March.
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  8. Bliss, Christopher & Nalebuff, Barry, 1984. "Dragon-slaying and ballroom dancing: The private supply of a public good," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 1-12, November.
  9. Robson, Arthur J, 1992. "Status, the Distribution of Wealth, Private and Social Attitudes to Risk," Econometrica, Econometric Society, vol. 60(4), pages 837-57, July.
  10. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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  12. Dasgupta, Partha & Maskin, Eric, 1986. "The Existence of Equilibrium in Discontinuous Economic Games, I: Theory," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 1-26, January.
  13. Green, Jerry & Stokey, Nancy, 1983. "A Comparison of Tournaments and Contracts," Scholarly Articles 3203644, Harvard University Department of Economics.
  14. Simon, Leo K, 1987. "Games with Discontinuous Payoffs," Review of Economic Studies, Wiley Blackwell, vol. 54(4), pages 569-97, October.
  15. Harold L. Cole & George J. Mailath & Andrew Postlewaite, . ""Incorporating Concern for Relative Wealth into Economic Models''," CARESS Working Papres 95-14, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  16. O'Keeffe, Mary & Viscusi, W Kip & Zeckhauser, Richard J, 1984. "Economic Contests: Comparative Reward Schemes," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 27-56, January.
  17. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
  18. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  19. Reny, Philip J., 1995. "Local Payoff Security and the Existence of Nash Equilibrium in Discontinuous Games," Working Paper Series 435, Research Institute of Industrial Economics.
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