Discrete Choice with Social Interactions I: Theory

William Brock and Steven Durlauf

Working Papers from Santa Fe Institute

Abstract: This paper provides an analysis of aggregate behavioral outcomes when individual utility exhibits social interaction effects. We study generalized logistic models of individual choice which incorporate terms reflecting the desire of individuals to conform to the behavior of others in an environment of noncooperative decisionmaking. Laws of large numbers are generated in such environments. Multiplicity of equilibria in these models, which are equivalent to the existence of multiple self-consistent means for average choice behavior, will exist when the social interactions exceed a particular threshold. Local stability of these multiple equilibria is also studied. The properties of an economy in which a social planner determines the set of individual choices. The model is additionally shown to be well suited to explaining a number of empirical phenomena, such as threshold effects in individual behavior, ethnic group fixed effects in income equations, and large cross-group differences in binary choice behavior.

Date: 1995-10
References: Add references at CitEc
Citations: View citations in EconPapers (38)

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

Related works:
Working Paper: Discrete Choice with Social Interactions I: Theory (1995)
Working Paper: Discrete Choice with Social Interactions I: Theory (1995)
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:wop:safiwp:95-10-084

Access Statistics for this paper

More papers in Working Papers from Santa Fe Institute Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().