This dissertation comprises three essays. Each essay challenges some of the commonly held beliefs about and provides novel insights into the role of status in markets. In essay 1, I study the causal effect of producer status on the price premiums producers are able to charge for their products, the underlying cause for this premium, and producers' incentives to invest in quality under a fixed status hierarchy. In essays 2 and 3, I investigate on the organizational and individual level, respectively, how high-status affiliations affect an audience's evaluation of a social actor's identity. The contribution of these papers lies in highlighting reasons for, mechanisms through, and conditions under which high-status affiliations become a liability.

Essay 1 addresses the recent debate about the causality, cause, and consequence of returns to status on the organizational level. I exploit the \textit{grand cru} classification of chateaux of the M'{e}doc created in 1855 as an unambiguous and exogenous status signal. I study its effect on wine prices and the incentive to invest in quality over a period of time during which information about producer and product quality has become increasingly munificent. As for the causality of status effects, I find evidence for causal returns to organizational status, but these returns are substantially overestimated if quality and reputation are not accurately controlled on the product level. As for the cause of status effects, I find that uncertainty is not a necessary condition and the taste for high-status products is a sufficient condition for returns to organizational status. As for the consequence of status effects, I find that higher-status producers' greater incentives to invest in quality are insufficient to enforce a separating equilibrium in producers' quality choices. The study cautions that causality claims in the status literature hinge upon proper identification, that returns to status can have alternative root causes, and that status hierarchies need not enshrine the quality hierarchy among producers.

In essay 2, I propose that an organization's growth potential may suffer if its identity is confounded with or eclipsed by the high-status organizations with which it collaborates and competes. I devise two network measures to capture the degree to which identities are confounded or eclipsed. The theory is then tested with data on U.S. venture capital firm syndication between 1995 and 2009. The more a VC firm's identity is confounded with the identities of co-syndicating high-status firms, the smaller is the likelihood that it is able to raise a new fund. Further, the likelihood that an eclipsed identity hurts a VC firm's chances to raise a new fund increases in the firm's status. These findings suggest that in status-based market competition an organization needs to justify its identity claim by distinguishing itself from the established elite.

Essay 3 picks up on anecdotal evidence that some audiences discount actors with strong high-status affiliations. This contradicts the extant literature, which in its overwhelming majority finds that an actor's chance to find audience approval for his identity increases in the strength of his high-status affiliations. In this article, I develop a unifying theoretical framework that is able to reconcile such seemingly contradictory effects. I propose that the optimal strength of high-status affiliations depends on an audience's taste for uniqueness/conformity in identity and the audience's uncertainty about the actor. An experiment shows that taste and uncertainty have interdependent effects, suggests that the extant status literature rests on implicit assumptions about audience taste, and highlights two conditions under which strong high-status affiliations are detrimental. Studies of rank mobility in academia and in a fraternity provide corroborating evidence for one of these conditions. Conformity-seeking audiences penalize too strong high-status affiliations if their uncertainty about the actor is high. The implications for identity design and social structure are discussed.