Value Formation: The Role of Esteem

46 Pages Posted: 28 May 2014 Last revised: 2 Jul 2015

See all articles by Robert Akerlof

Robert Akerlof

University of Warwick - Department of Economics

Date Written: July 1, 2015


The values people hold play an important role in shaping their behavior, but our under- standing of how values form is incomplete. We consider a model in which players choose values, motivated by economic considerations and, crucially, also by the desire for esteem. The comparative statics are driven by the following tension: players obtain more esteem from peers if they conform in their choice of values; but they may obtain more self-esteem if they differentiate. This tension explains why, for instance, peer effects are sometimes positive and sometimes negative. We discuss three illustrations, related to: schools, inner cities, and organizational “resistance.”

Keywords: Identity, culture, values, schooling, inner cities, organizational resistance

JEL Classification: Z13, J01

Suggested Citation

Akerlof, Robert, Value Formation: The Role of Esteem (July 1, 2015). Available at SSRN: or

Robert Akerlof (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

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