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A theory of esteem based peer pressure

Fabrizio Adriani and Silvia Sonderegger

Games and Economic Behavior, 2019, vol. 115, issue C, 314-335

Abstract: How does the incentive to engage in social signaling depend on the composition of peers? We find that an increase in the mean peer quality may either strengthen signaling incentives (keeping up with the Joneses) or weaken them (small fish in a big pond). Both right and left truncations of the distribution of peer quality reduce signaling incentives, while more dispersed peer distributions strengthen them. Finally, more right skewed peer distributions strengthen signaling incentives when only a small fraction of the group engage in signaling, but weaken them when signaling is widespread.

Keywords: Esteem; Status; Peer pressure; Signaling; Small fish in a big pond; Conspicuous consumption; Distributional comparative statics (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2019
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