Competition for Status Creates Superstars: An Experiment on Public Good Provision and Network Formation
89 Pages Posted: 22 May 2015 Last revised: 16 Sep 2018
Date Written: July 11, 2018
We investigate a mechanism that facilitates the provision of public goods in a network formation game. We show how competition for status encourages a core player to realize efficiency gains for the entire group. In a laboratory experiment we systematically examine the effects of group size and exogenously monetarized status rents. The experimental results provide very clear support for the concept of challenge-freeness, a refinement that predicts when a repeated game equilibrium will be played, and if so which one. Two control treatments allow us to reject the possibility that these observations are driven by social preferences, independently of the competition for status.
Keywords: Network formation, public goods, competition, status
JEL Classification: C91, D85, H41
Suggested Citation: Suggested Citation