Integration and Diversity

Sanjeev Goyal, Penélope Hernández, Guillem Martínez-Cánovas, Frederic Moisan (), Manuel Munoz and Angel Sánchez
Additional contact information
Penélope Hernández: UV - Universitat de València = University of Valencia
Guillem Martínez-Cánovas: UV - Universitat de València = University of Valencia
Frederic Moisan: EM - EMLyon Business School
Angel Sánchez: UC3M - Universidad Carlos III de Madrid [Madrid]

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Abstract: We study a setting where individuals prefer to coordinate with others but they differ on their preferred action. Our interest is in understanding the role of link formation with others in shaping behavior. So we consider the situation in which interactions are exogenous and a situation where individuals choose links that determine the interactions. Theory is permissive in both settings: conformity (on either of the actions) and diversity (with different groups choosing their preferred actions) are both sustainable in equilibrium. We conduct an experiment to understand how link formation affects equilibrium selection. Our experiment reveals the powerful effect of linking on equilibrium selection: with an exogenous complete network, subjects choose to conform on the majority's preferred action. By contrast, with endogenous linking—irrespective of the costs of linking—subjects always opt for diversity of actions.

Keywords: networks; equilibrium selection; Social coordination; experiment (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-gth, nep-net and nep-ure
Note: View the original document on HAL open archive server: https://hal.science/hal-03188210v1
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Citations: View citations in EconPapers (1)

Published in Experimental Economics, 2021, 24 (2), 387-413 p. ⟨10.1007/s10683-020-09676-6⟩

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Related works:
Journal Article: Integration and diversity (2021)
Working Paper: Integration and diversity (2021)
Working Paper: Integration and Diversity (2020)
Working Paper: Integration and Diversity (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03188210

DOI: 10.1007/s10683-020-09676-6

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