The Dark Side of Peers: Demotivation through Social Comparison in Networks

Frédéric Deroïan () and Mohamed Belhaj ()
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Frédéric Deroïan: Aix-Marseille Univ., CNRS, AMSE, Marseille, https://www.amse-aixmarseille.fr/en/members/dero%C3%AFan
Mohamed Belhaj: Aix-Marseille Univ., CNRS, AMSE, Marseille, https://www.amse-aixmarseille.fr/en/members/belhaj

No 2511, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: This paper introduces demotivation in the context of social comparison in networks. Social comparison is modeled as a status effect rewarding or penalizing agents according to their relative performance with respect to local peers. A demotivated agent faces both a reduced marginal return to effort and a psychological cost. In the absence of demotivation, social comparison leads to higher effort levels but reduces equilibrium welfare. Introducing demotivation leads to two main findings. First, it generates a network game of strategic substitutes. Second, despite the individual psychological costs incurred by demotivated agents, it can enhance overall welfare—by alleviating social pressure to exert effort and by generating positive externalities for peers.

Keywords: Social Comparison; Demotivation; Networks; Strategic Substitutes, Equilibrium Welfare. (search for similar items in EconPapers)
JEL-codes: C72 D83 D85 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2025-05
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:2511

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