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Expectation Formation and Social Influence

Andreas Karpf ()

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This article investigate the role of social influence for the expectation formation of economic agents. Using self-organizing Kohonen maps the repeated cross-section data set of the University of Michigan consumer survey is transformed into a pseudo panel allowing to monitor the expectation formation of cohorts with regard to business confidence over the whole available time span (January 1978 - June 2013). Subsequently the information theoretic concept of transfer entropy is used to reveal the role of social influence on the expectation formation as well as the underlying network structure. It is shown that social influence strongly depends on socio-demographic characteristics and also coincides with a high degree of connectivity. The social network estimated in this way follows a power-law and thus exhibits similar structure as networks observed in other contexts

Keywords: Social networks; expectations; household survey (search for similar items in EconPapers)
JEL-codes: D12 D83 D84 D85 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-02
New Economics Papers: this item is included in nep-cdm, nep-ict, nep-net and nep-soc
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ftp://mse.univ-paris1.fr/pub/mse/CES2014/14005.pdf (application/pdf)

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Working Paper: Expectation Formation and Social Influence (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:14005

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