Social distance, heterogeneity and social interactions

Rama Cont () and Matthias Loewe
Additional contact information
Rama Cont: LPMA - Laboratoire de Probabilités et Modèles Aléatoires - UPMC - Université Pierre et Marie Curie - Paris 6 - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique, Columbia University [New York]
Matthias Loewe: Institut für Mathematische Statistik [Munster] - WWU - Westfälische Wilhelms-Universität Münster = University of Münster

Post-Print from HAL

Abstract: A crucial ingredient in social interaction models is the structure of peer groups, which link individuals with similar characteristics. We propose and study a dynamic binary choice model with social interactions in which heterogeneity of peer group effects is modeled introducing diversity in individual characteristics and linking pairwise influences to a social distance between individuals. Our framework allows for mimetic as well as anti-mimetic interactions and a heterogeneous structure of peer groups across individuals. Dynamic equilibria are studied in the limit when the number of agents is large. We show that the model exhibits multiple equilibria resulting from conflicts between various group pressures the individuals are subjected to. We study in particular the correlation in the population at equilibrium between the characteristics of the agents and their decisions: this quantity has an interesting empirical interpretation and solves a simple analytical equation when the number of agents is large. Finally we discuss the empirical content of the model and present a consistent estimator for the parameter describing which is consistent for any typical population regardless of the structure of individual characteristics.

Keywords: Discrete choice models; Social interactions; Hopfield model; Disordered systems; Random utility models; Limit theorems; Neural networks; Heterogeneity (search for similar items in EconPapers)
Date: 2010-07-10
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Published in Journal of Mathematical Economics, 2010, 46 (4), pp.572-590. ⟨10.1016/j.jmateco.2010.03.009⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:hal:journl:hal-00545746

DOI: 10.1016/j.jmateco.2010.03.009

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().