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What is the best way to design tournaments for status, in which individuals labor primarily for the esteem of their peers? What process, in other words, should organizers of status-based contests impose upon those who covet peer recognition? We propose a formal model of status-based competition that contrasts two competing alternatives. The first, following Merton, is the "Matthew Effect," according to which a tournament's architect directs slack resources to elite actors and thus widens the distribution of rewards by favoring cumulative advantage. The second is the "Mark Effect," under which a tournament's designer instead pushes slack resources to marginal actors and thus tightens the distribution of rewards. Our results suggest that although the Mark Effect is better for the social welfare of most tournaments, the Matthew Effect is preferable in two distinct contexts: in small tournaments where variation in underlying ability translates into acute advantages for the most capable contestants; and in large tournaments whose contestants face constant, rather than rising, marginal costs-a condition we relate to contestants' perception of their work as intrinsically valuable. Our contributions are twofold: We find, counter to the thrust of Merton's work, that cumulative advantage is not invariably optimal for the functioning of status contests; and we identify circumstances in which the production of superstars is likely to make contests for status better off in aggregate. Implications for future research on status and management are discussed.

© 2011 INFORMS

Der steigende Bandbreitenbedarf aufgrund datenintensiver Anwendungen, die Konvergenz verschiedenster digitaler Kommunikationstechnologien sowie die zunehmende kommerzielle Bedeutung des Internet werfen eine der wichtigsten Fragen der kommenden Jahre auf: ob und wie sich das Wirtschaftsmodell des Internet weiterentwickeln muss und welche Rolle der Regulierung in diesem Zusammenhang zukommen sollte. Die Vor- und Nachteile einer Netzneutralitätsregulierung im US-amerikanischen Kontext werden gegenwärtig in den USA - unter Teilnahme führender Wissenschaftler - intensiv debattiert. In Europa gab es zu dem in diesem Zusammenhang eingeleiteten Konsultationsverfahren der Europäischen Kommission in der zweiten Hälfte von 2010 über 300 Stellungnahmen, was das lebhafte Interesse von politischen Entscheidungsträgern und Regulatoren, Wirtschaftsvertretern und der allgemeinen Öffentlichkeit an diesem Thema unter Beweis stellt. Was jedoch fehlt, ist eine eingehende Analyse der Auswirkungen einer Netzneutralitätsregulierung auf potenzielle Internet-Geschäftsmodelle, bei der die verschiedenen Marktbedingungen in Europa, und darunter insbesondere die europäische Zugangsregulierung, berücksichtigt werden.

A pdf file of this working paper may be available at INSEAD.

The increasing demand for bandwidth due to data-intense applications, the convergence of various digital communication technologies as well as the increasing commercial importance of the Internet has given rise to one of the most important questions in the coming years: whether and how the Internet economic model needs to evolve and what role regulation should play in this process. An extensive debate in the US - including contributions by distinguished scholars - has been looking at the pros and cons of net neutrality regulation in the US context. Also in Europe, the European Commission's consultation process in the second half of 2010, which resulted in over 300 responses, shows the vivid interest of policy makers and regulators, industry, and the general public on that matter. However, what is missing is a thorough analysis of the implications of net neutrality regulation on some possible Internet business models adapted to the different market conditions in Europe, foremost European access regulation. In this context, ESMT Competition Analysis analyzes the interaction between different net neutrality regulations and Internet business models. Net neutrality regulation, if and when formally implemented in some shape or form, has the potential to reallocate resources among industry participants, affect optimal pricing strategies, and ultimately impact investment and innovation incentives. Through these effects, the regulatory framework is going to affect which business models will be at all feasible, which are going to thrive, and which will become obsolete. The report derives and analyzes some likely future business models with a view to sustainability in terms of the ability to accommodate increasing traffic volumes and social welfare implications. Based on these assessments, the regulatory implications are discussed for each business model.

The increasing demand for bandwidth due to data-intense applications, the convergence of various digital communication technologies as well as the increasing commercial importance of the Internet has given rise to one of the most important questions in the coming years: whether and how the Internet economic model needs to evolve and what role regulation should play in this process. Net neutrality regulation, if and when formally implemented in some shape or form, has the potential to reallocate resources among industry participants, affect optimal pricing strategies and ultimately impact investment and innovation incentives. Through these effects, the regulatory framework is going to affect which business models will be at all feasible, which are going to thrive, and which will become obsolete. The report derives and analyzes some likely future business models with a view to sustainability in terms of ability to accommodate increasing traffic volumes and social welfare implications. Based on these assessments the regulatory implications are discussed for each business model. The stylized business models each focus on a different aspect: the "Congestion-Based Model" stresses the possibility to tackle congestion problems through congestion-based pricing. The "Best Effort Plus" preserves the traditional best effort network but gives ISPs more leeway with innovative services. The "Quality Classes - Content Pays" stresses the observed need of different applications for various degrees of quality of service. The "Quality Classes - User Pays" model, however, puts the focus on consumer choice for higher quality levels.

We discuss the reasons why this call for papers was issued and describe the process of selecting the three articles presented in this special section. We argue that maximizing stakeholder welfare and not just consumption maybe a new goal for marketing that will be consistent with emerging societal trends. Three articles on volunteerism, price assurances, and direct-to-consumer advertising result from our call and are presented in this section. This introduction is an overview of the three articles.

With permission of Elsevier

The three-part case study "Mr. KLM" recounts the story of the world's deadliest plane accident: the crash of two Boeing 747 aircraft at Tenerife in 1977. The case describes both the actual events leading up to the disaster as well as the main character and the case protagonist, KLM Captain Jacob "Jaap" Veldhuyzen van Zanten, to account for the fact that there had actually been two crashes that day: the airplane crash and the crash of "Mr. KLM," Jacob Veldhuyzen van Zanten. The case illustrates the paradigm of a homo rationale who, in an unusual situation, seems to throw aboard principles of rationality while reverting to decisions and behaviors best understood in the light of intuitive, unreflected, biased, or irrational decision making. The case serves as an illustration of findings and principles of social psychology, irrational decision theory, and behavioral economics.