Integration and diversity

Sanjeev Goyal, Penélope Hernández (), Guillem Martínez-Cánovas (), Frédéric Moisan (), Manuel Munoz and Angel Sánchez ()
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Penélope Hernández: Universitat de València
Guillem Martínez-Cánovas: Universitat de València
Frédéric Moisan: EM Lyon Business School, GATE
Angel Sánchez: Universidad Carlos III de Madrid

Experimental Economics, 2021, vol. 24, issue 2, No 2, 387-413

Abstract: 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)
JEL-codes: C72 C92 D03 D85 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (3)

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Working Paper: 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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DOI: 10.1007/s10683-020-09676-6

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