Individual choice under social influence

Yusufcan Demirkan () and Boyao Li ()
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Yusufcan Demirkan: New York University
Boyao Li: New York University

Economic Theory, 2023, vol. 76, issue 2, No 7, 585-606

Abstract: Abstract Individual decision makers (DMs) are often influenced by their social environment when making choices. In this paper, we propose a simple choice-theoretic model to take into account the impact of social groups on individual decision making. First, we define a notion of socially acceptable alternatives by a particular social group from an arbitrary menu, which is analogous to indifference sets in consumer theory. We then proceed to study two potential scenarios in which a DM’s choices are distorted by social influence. While social groups serve as tie-breakers in the first case, in the second case they become more influential in shaping DM’s preferences in conformity to its own social preferences. Thus, the two scenarios we discuss could be seen as two extreme cases of social influence on individual choices. In each case, characterization theorems are provided to identify choice correspondences that satisfy our models. Some of our axioms are extensions of classic axioms. Thus, the characterization theorems also show what choice behaviors these axioms describe when adapted to the context of social influence on individual decision making.

Keywords: Bounded rationality; Social choice; Top-cycle; Preference; Framing effect; Social influence (search for similar items in EconPapers)
JEL-codes: D01 D11 D71 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00199-022-01466-w

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