Dispersed Behavior and Perceptions in Assortative Societies

Mira Frick (), Ryota Iijima () and Yuhta Ishii
Additional contact information
Mira Frick: Cowles Foundation, Yale University
Ryota Iijima: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/ryota-iijima
Yuhta Ishii: Pennsylvania State University

No 2128R3, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We formulate a model of social interactions and misinferences by agents who neglect assortativity in their society, mistakenly believing that they interact with a representative sample of the population. A key component of our approach is the interplay between this bias and agents’ strategic incentives. We highlight a mechanism through which assortativity neglect, combined with strategic complementarities in agents’ behavior, drives up action dispersion in society (e.g., socioeconomic disparities in education investment). We also suggest that the combination of assortativity neglect and strategic incentives may be relevant in understanding empirically documented misperceptions of income inequality and political attitude polarization.

Keywords: Assortativity neglect; Misperception; Strategic complementarities (search for similar items in EconPapers)
JEL-codes: C70 D83 D90 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2018-04, Revised 2022-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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