SOCIAL NETWORKING AND INDIVIDUAL OUTCOMES: INDIVIDUAL DECISIONS AND MARKET CONTEXT

Yannis Ioannides and Adriaan R. Soetevent ()
Additional contact information
Adriaan R. Soetevent: University of Amsterdam and Tinbergen Institute

No 05-16, Working Papers from NET Institute

Abstract: This paper examines social interactions when social networking is endogenous. It employs a linear-quadratic model that accommodates contextual e®ects, and endogenous local inter- actions, that is where individuals react to the decisions of their neighbors, and endogenous global ones, where individuals react to the mean decision in the economy, both with a lag. Unlike the simple V AR(1) structural model of individual interactions, the planner's problem here involves intertemporal optimization and leads to a system of linear di®erence equations with expectations. It highlights an asset-like property of socially optimal outcomes in every period which helps characterize the shadow values of connections among agents. Endogenous networking is easiest to characterize when individuals choose weights of social attachment to other agents. It highlights a simultaneity between decisions and patterns of social at- tachment. The paper also poses the inverse social interactions problem, asking whether it is possible to design a social network whose agents' decisions will obey an arbitrarily speci¯ed variance covariance matrix.

JEL-codes: A14 D85 J0 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2005-10, Revised 2005-10
New Economics Papers: this item is included in nep-cbe, nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.netinst.org/Ioannides_Soetevent.pdf (application/pdf)
no

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:0516

Access Statistics for this paper

More papers in Working Papers from NET Institute
Bibliographic data for series maintained by Nicholas Economides ().