The intensity of keeping up with the Joneses: evidence from neighbour effects in car purchases

We show that status-driven behaviour is largely determined by how connected a community is. Using a unique dataset on car purchases in Southern California, we show that social influence intensifies in suburban communities in which neighbours are likely to know each other well. The effect of connected communities cannot be fully explained by word of mouth, as it spills over across different makes, and is particularly apparent in higher price segments. We argue that, in connected communities, the signalling of income or wealth through the public display of consumption has a substantial effect on the behaviour of neighbours.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1805206First author draf

Does competition between stars increase output? Evidence from financial analyst forecasts

Top sportsmen often refer to competition against other top sportsmen as a motivation to exert more effort. We examine whether a similar pattern exists among another group of top professionals – star analysts. Our evidence suggests that star analysts concentrate their efforts and generate substantially more accurate earnings forecasts in multi-star stocks, in which they cross paths with other stars. We further show that the higher accuracy in multi-star stocks is not driven by other changes in the information environment of the firms. Our results suggest that competition among stars has substantial effects on the largest firms in financial markets.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2427567First author draf

(Job Market Paper)

Zapatero, participants to the FMA doctoral student consortium for their helpful comments and suggestions. In this paper I show that if risk-averse agents prefer both to be richer in absolute terms and to be richer than their peers (relative-wealth concerns), then 1) they will prefer positive correlation between their payo s and the payo s of other agents, and 2) they will be averse to negative correlation between payo s. I test these theoretical predictions in a laboratory experiment. I nd that subjects prefer positively correlated payo s over risk-free and negatively correlated payo s. Furthermore, subjects who by observing other participants ' payo s signal stronger relative-wealth concerns, also show stronger aversion to negatively correlated payo s. Finally, women appear to be concerned about other agents ' payo s more than men. This novel evidence has implications that help explain why rms apparently use pro t-sharing and broad-based incentives contracts too extensively, and why Relative Performance Evaluation (RPE) contracts are scarcely used in common compensation practice. 2