Status competition and benevolence in social networks

Yao-Yu Chih

Oxford Economic Papers, 2018, vol. 70, issue 1, 141-162

Abstract: Motivated by recent studies of network analysis, we explore the consumption externality that results from the interdependence of asymmetric preferences. In addition to the positional externality that results from jealousy or from the desire to leapfrog peers, we assume that agents are mutually benevolent, i.e., they are concerned about general welfare. Two contrasting scenarios, limited status competition and extensive status competition networks, are examined. Both these network structures suggest that social welfare improves in the presence of benevolence and that this matters more if the individual is more influential in her network. Finally, we analyse the corresponding policy intervention in response to a reduction in equilibrium overconsumption and overwork levels.

JEL-codes: D11 D62 D64 D85 (search for similar items in EconPapers)
Date: 2018
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