Instrumental cardinal concerns for social status in two-sided matching with non-transferable utility |
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Affiliation: | 1. Dipartimento di Economia “Marco Biagi”, Università degli Studi di Modena e Reggio Emilia, Viale Berengario 51, 43 ovest, 41121 Modena, Italy;2. Dipartimento di Economia e Management, Università degli Studi di Pisa, Via Cosimo Ridolfi 10, 56124 Pisa, Italy;1. Department of Economics, Auburn University, 0332 Haley Center, Auburn 36849, AL, United States;2. Department of Economics, College of William & Mary, Morton Hall 131, Williamsburg 23185, VA, United States |
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Abstract: | In this paper we apply the instrumental approach to social preferences in order to distinguish among various shapes of preferences for social status. In particular, we consider the shape of reduced preferences that emerge in the equilibrium of a two-sided matching model with non-transferable utility. Cole et al., 1992, Cole et al., 1995 show that, under full observability of potential mates׳ attributes, instrumental concerns for social status are ordinal, i.e., only one׳s own rank in the distribution of attributes matters. We show that when we depart from full observability, instrumental concerns for social status become cardinal, i.e., also other features of the distribution of attributes matter. We also show that the actual shape of cardinal concerns depends on how individuals can deal with the informational asymmetry, alternatively leading to upward concerns, i.e., making comparisons with higher rank people; downward concerns, i.e., making comparisons with lower rank people; or bidirectional concerns, i.e, being both upward and downward. |
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Keywords: | Asymmetric information Matching Social preferences Instrumental approach Social status |
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