(On the other hand, while I believe thinking about "gaming" the ranking takes away from the fun of the game, Dress to Impress is massively popular, so maybe this frustration is what makes it popular. IDK if kids play it because there are no competitors in the genre or because some competitive toxicity is addictive.)
In short, pairwise rankings are real and comparable between people whereas different people might use a scale differently. It's a difficult problem to deal with "i like the bagel shop a little bit more than the rice bowl restaurant but the party member who has celiac's opinion matters more than mine" See
https://brocku.ca/MeadProject/Thurstone/Thurstone_1927f.html
now if you have N options you don't have to have everyone evaluate N(N-1) pairs because preferences are correlated and should be transitive. There are many algorithms, like Elo and the methods in that paper that can be used to run tournaments and compute scores. The game Covet uses pairwise ranking and I think gets good scores.
To get back to social decision theory, it's probably not good for players to be in a team for purposes of winning and losing. Like I think sharing clothes with your friends is a really fun mechanic (might make you want to really buy or work for something!) but if people can help or hurt their friends you get into the whole can of worms of coalitions in N-person games.
I just quickly tried Covet and I can imagine how the act of comparing and picking one of the two options can feel fun. I can see myself just voting on outfits in the game without creating my own when I need some really simple "mindless" fun. Not a productive effect but also not addictive enough AFAIK to be a big problem.
I think teams can work as a concept but you need to design them with a great deal of care so that mechanics are pro-social and fascilitate friendships -- there's a nice article about it: https://www.gamedeveloper.com/design/game-design-patterns-fo...