The effect of relative reputational concerns in sequential deliberation models

The payoff of an employee often not only depends on his own reputation, but on the reputation of his peers as well. This is caused by the fact that they generally move up the corporate ladder through promotions, for which they compete with their direct colleagues. However, most papers on reputational concerns do not take this into account. This paper finds that, in a game-theoretical sequential deliberation model with relative reputational concerns, agents have an extra incentive to either mirror or contradict (depending on their ex-ante reputations) the decision of other agents, compared to a similar model without relative reputational concerns. Agents with an ex-ante reputation that is higher than that of their colleague have an incentive to mirror the decision of their colleague. Agents with an ex-ante reputation that is lower than that of their colleague have an incentive to contradict the decision of their colleague.