Social Norms in Networks

Philip Ushchev and Yves Zenou

No 12752, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this study, we develop a social-norm model that provides a microfoundation of the linear-in-means model and investigate its properties. We show that individual outcomes may increase, decrease, or vary non-monotonically with the taste for conformity. Equilibria are usually inefficient and, to restore the first best, the planner needs to subsidize (tax) agents whose neighbors make efforts above (below) the social norms. Thus, giving more subsidies to more central agents is not necessarily efficient. We also discuss the policy implications of our model in terms of education and crime.

Keywords: social norms; conformism; local-average model; welfare; anti-conformism; network formation (search for similar items in EconPapers)
JEL-codes: D85 J15 Z13 (search for similar items in EconPapers)
Pages: 96 pages
Date: 2019-11
New Economics Papers: this item is included in nep-gth, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Journal of Economic Theory, 2020, 185, 104969.

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Related works:
Journal Article: Social norms in networks (2020)
Working Paper: Social Norms in Networks (2019)
Working Paper: Social Norms in Networks (2018)
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