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The things we do: The entourage effect

Roxanne Bauer's picture

Members of the Association Culture et Developpement de Kasserine (ACD) “Culture and Development Association of Kasserine”Psychological research explores a phenomenon known as the "entourage effect"in which allowing individuals, referred to as VIPs, to share otherwise-exclusive privileges with a circle of friends, elevates the status of the VIP.

Economists and marketers alike have known for a long time now that the perceived status of a product has a tremendous impact on sales and who the customer base is. The basic economic reasoning is that the scarcer a product or service is, the more valuable it is perceived to be. The scarcity or exclusivity of the product or service signals its status.

Research on this topic, however, highlights the ultimate form of status: the entourage.

Brent McFerran of the University of Michigan, Stephen M. Ross School of Business and Jennifer Argo of the University of Alberta, Department of Marketing, Business Economics, & Law published a paper in September 2012 called the “The Entourage Effect” in which they demonstrated that when an individual earns or wins a reward, they enjoy it more if they can share it with people they like. This individual, referred to as the VIP because a priviledge has been granted to them, gains status from the act of sharing.  The authors write, “the presence of others (i.e., an entourage) alters a VIP's personal feelings of status.” In particular, they show that “VIPs feel higher levels of status when they are able to experience preferential treatment with an entourage, even if this results in the rewards associated with the treatment becoming less scarce.”  Even though VIPs are sharing their reward, reducing its exclusivity, they nonetheless feel higher levels of status.

Quote of the Week: Francis Ford Coppola

Sina Odugbemi's picture

“You know, life is romantic.  All these things, the unity of the arts, food, and people coming together, to see a beautiful show or have a good meal, these are the joys that we are blessed with.”
 
- Francis Ford Coppola, an American film director, producer and screenwriter. He is most famous for his work on the The Godfather trilogy of films.