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Losing face

Losing face
Losing face
When Al makes an offer to Betty that Betty observes and rejects, Al may suffer a painful and costly ‘loss of face’ (LoF). LoF can be avoided by letting the vulnerable side move second, or by setting up ‘Conditionally Anonymous Environments’ that only reveal when both parties say yes. This can impact bilateral matching problems, e.g., marriage markets, research partnering, and international negotiations. We model this assuming asymmetric information, continuous signals of individuals’ binary types, linear marriage production functions, and a primitive LoF term component to utility. LoF makes rejecting one’s match strictly preferred to being rejected, making the ‘high types always reject’ equilibrium stable. LoF may have non-monotonic effects on stable interior equilibria. A small LoF makes high types more selective, making marriage less common and more assortative. A greater LoF (for males only) makes low-type-males reverse snobs, which makes high-females less choosy, with ambiguous effects on the marriage rate.
0030-7653
Gall, Thomas
8df67f3d-fe3c-4a3f-8ce7-e2090557fcd4
Reinstein, David
4a665c8b-3e21-418a-8cd7-9f9c3979b0bd
Gall, Thomas
8df67f3d-fe3c-4a3f-8ce7-e2090557fcd4
Reinstein, David
4a665c8b-3e21-418a-8cd7-9f9c3979b0bd

Gall, Thomas and Reinstein, David (2019) Losing face. Oxford Economic Papers. (doi:10.1093/oep/gpz018).

Record type: Article

Abstract

When Al makes an offer to Betty that Betty observes and rejects, Al may suffer a painful and costly ‘loss of face’ (LoF). LoF can be avoided by letting the vulnerable side move second, or by setting up ‘Conditionally Anonymous Environments’ that only reveal when both parties say yes. This can impact bilateral matching problems, e.g., marriage markets, research partnering, and international negotiations. We model this assuming asymmetric information, continuous signals of individuals’ binary types, linear marriage production functions, and a primitive LoF term component to utility. LoF makes rejecting one’s match strictly preferred to being rejected, making the ‘high types always reject’ equilibrium stable. LoF may have non-monotonic effects on stable interior equilibria. A small LoF makes high types more selective, making marriage less common and more assortative. A greater LoF (for males only) makes low-type-males reverse snobs, which makes high-females less choosy, with ambiguous effects on the marriage rate.

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Losing Face 2018 - Accepted Manuscript
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Accepted/In Press date: 8 January 2019
e-pub ahead of print date: 15 March 2019

Identifiers

Local EPrints ID: 427678
URI: https://eprints.soton.ac.uk/id/eprint/427678
ISSN: 0030-7653
PURE UUID: 3efa5ed1-f74a-4f96-9d35-79e83e0e3fda
ORCID for Thomas Gall: ORCID iD orcid.org/0000-0003-2257-1405

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Date deposited: 25 Jan 2019 17:30
Last modified: 30 Oct 2019 01:32

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