  We investigate a group choice problem of agents pursuing social status. We
assume heterogeneous agents want to signal their private information (ability,
income, patience, altruism, etc.) to others, facing tradeoff between "outside
status" (desire to be perceived in prestigious group from outside observers)
and "inside status" (desire to be perceived talented from peers inside their
group). To analyze the tradeoff, we develop two stage signaling model in which
each agent firstly chooses her group and secondly chooses her action in the
group she chose. They face binary choice problems both in group and action
choices. Using cutoff strategy, we construct an partially separating
equilibrium such that there are four populations: (i) choosing high group with
strong incentive for action in the group, (ii) high group with weak incentive,
(iii) low group with strong incentive, and (iv) low group with weak incentive.
By comparative statics results, we find some spillover effects from a certain
group to another, on how four populations change, when a policy is taken in
each group. These results have rich implications for group choice problems like
school, firm or residential preference.
