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Far above others

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  • López-Pintado, Dunia
  • Meléndez-Jiménez, Miguel A.

Abstract

We study the role of competitiveness, via interpersonal comparisons, in a society or a large organization. We consider a dynamic model of effort provision. Agents gain an extra utility by producing an outcome above a “comparison threshold” derived from the outcomes of their reference group in a random network. There are two different sources of competitiveness: the stringency of the comparison threshold and the weight given to relative performance in the utility function. We find that these two sources operate in opposite directions. Societies with higher competitiveness may not necessarily lead to more competitive outcomes (i.e., higher effort provision). Finally, we show that the effects of an increase in the density and variance of the network crucially depend on the stringency of the comparison threshold.

Suggested Citation

  • López-Pintado, Dunia & Meléndez-Jiménez, Miguel A., 2021. "Far above others," Journal of Economic Theory, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:jetheo:v:198:y:2021:i:c:s0022053121001939
    DOI: 10.1016/j.jet.2021.105376
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    • Dunia López-Pintado & Miguel A. Meléndez-Jiménez, 2018. "Far above others," Working Papers 18.12, Universidad Pablo de Olavide, Department of Economics.

    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Reference points; Competitiveness; Interpersonal comparisons; Networks;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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