An Economic Model of Friendship: Homophily, Minorities and Segregation

Sergio Currarini (), Paolo Pin and Matthew Jackson

No 2007_20, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: We develop a model of friendship formation that sheds light on segregation patterns observed in social and economic networks. Individuals come in different types and have type-dependent benefits from friendships; we examine the properties of a steady-state equilibrium of a matching process of friendship formation. We use the model to understand three empirical patterns of friendship formation: (i) larger groups tend to form more same-type ties and fewer other-type ties than small groups, (ii) larger groups form more ties per capita, and (iii) all groups are biased towards same-type relative to demographics, with the most extreme bias coming from middle-sized groups. We trace each of these empirical observations to specific properties of the theoretical model and highlight the role of choice and chance in generating homophilous behavior. Finally we discuss welfare implications of the model.

Keywords: Networks; Homophily; Segregation; Friendships; Social Networks; Integration; Diversity; Minorities (search for similar items in EconPapers)
JEL-codes: A14 D85 J15 J16 (search for similar items in EconPapers)
Pages: 46
Date: 2007
New Economics Papers: this item is included in nep-net, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (53)

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Related works:
Journal Article: An Economic Model of Friendship: Homophily, Minorities, and Segregation (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ven:wpaper:2007_20

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