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

Boris van Leeuwen

Tilburg University - Department of Economics

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE)

Arthur J. H. C. Schram

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute

Date Written: July 11, 2018

Abstract

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

van Leeuwen, Boris and Offerman, Theo and Schram, Arthur J. H. C., Competition for Status Creates Superstars: An Experiment on Public Good Provision and Network Formation (July 11, 2018). Available at SSRN: https://ssrn.com/abstract=2609289 or http://dx.doi.org/10.2139/ssrn.2609289

Boris Van Leeuwen (Contact Author)

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4294 (Phone)
+31 20 525 5283 (Fax)

Arthur J. H. C. Schram

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 18
CREED
Amsterdam 1018 WB
Netherlands
+31 (0)20 525 4293 (Phone)

HOME PAGE: http://www.fee.uva.nl/creed/PEOPLE/Arthurs.htm

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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