An Economy of Reputation
Blog
Have you ever had a gut feeling, as you were about to introduce two friends, that they might not get along? One of these friends is someone you hold in high regard. The other — though it’s hard to admit — is someone you’re slightly ashamed of and worry they might embarrass you in front of the other friend. Consequently, you might ponder: why am I feeling this shame, and why do I even care?
It all hinges on your personal social status. Picture this scenario: Tom’s former colleague, Lilly, asks for an introduction to his current manager, Brian. However, Lilly had a junior position at Tom’s previous job. By agreeing to her request, Tom risks tarnishing his reputation in Brian’s eyes and jeopardizes his social standing. Conversely, if the roles were switched and Lilly had been a higher-up compared to Tom, he would have been more inclined to make the introduction to enhance his own status.
This behavior can also be seen in the business world, especially in advertising. It’s why we often see ads with celebrities on social media. Brands collaborate with celebrities and influencers to gain a stronger presence in these platforms and attract more followers.
This strategy can be described as the “economy of reputation” – leveraging reputation for business gains. A company might hire a celebrity to endorse its products, hoping the star’s good name will boost its brand image. In such agreements, there’s a balance of social status between both parties.
The terms of these deals are often determined by each side’s reputation. Influencers come with a price tag — the more famous they are, the higher their fee. This is true for businesses too. If a lesser-known company approaches a big-name celebrity for an endorsement, the dynamics between them are skewed. It’s like the situation with Tom and Lilly: if the partnership doesn’t enhance the celebrity’s image, either they’ll ask for more money, or if the deal doesn’t benefit them enough, they’ll decline.
Our place in the social hierarchy is always changing. Every interaction we have can either lift us up or pull us down. This can even lead us to turn down certain interactions to avoid harming our reputation. We’re constantly trying to boost our social status through our associations, among other factors.