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http://hdl.handle.net/10397/91277
| Title: | Positional competition : a theory of the Great Gatsby curve and the Easterlin paradox | Authors: | Peng, B | Issue Date: | Jun-2021 | Source: | Journal of economic behavior & organization, June 2021, v. 186, p. 562-575 | Abstract: | This paper provides a novel theory that simultaneously explains the Great Gatsby curve and the Easterlin paradox, demonstrating that these two phenomena could be driven by the same mechanism. I model positional competition, in which productive opportunities are allocated according to relative performance, as a Nash equilibrium outcome of agents reacting optimally to a distribution of productive opportunities. Positional competition is not a zero-sum game and its intensity is endogenously determined. The distribution of income and intergenerational mobility are also endogenously determined, with income following a power law distribution. As productivities become more dispersed, optimizing agents respond by competing more intensely with each other. This endogenous intensification lies at the heart of my explanation for both the Great Gatsby curve and the Easterlin paradox. | Keywords: | Equality of opportunities Happiness Inequality Mobility Power law distributions Superstar effect |
Publisher: | Elsevier BV | Journal: | Journal of economic behavior & organization | ISSN: | 0167-2681 | DOI: | 10.1016/j.jebo.2021.04.003 | Rights: | © 2021 The Author. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/ ) The following publication Peng, B. (2021). Positional competition: A theory of the Great Gatsby curve and the Easterlin paradox. Journal of Economic Behavior & Organization, 186, 562-575 is available at https://doi.org/10.1016/j.jebo.2021.04.003 |
| Appears in Collections: | Journal/Magazine Article |
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| 1-s2.0-S016726812100144X-main.pdf | 630.83 kB | Adobe PDF | View/Open |
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