An Economic Model of Friendship: Homophily, Minorities and Segregation

Sergio Currarini (), Paolo Pin () and Matthew O. Jackson ()

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

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: D85 A14 J15 J16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-net, nep-soc and nep-ure
Date: Written
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Related works:
Journal Article: An Economic Model of Friendship: Homophily, Minorities, and Segregation (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:ven:wpaper:2007_20

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