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Social Interactions with Endogenous Associations

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  • Bruce A. Weinberg

Abstract

This paper develops a model of social interactions with endogenous association. People are assumed to invest in relationships to maximize their utility. Even in a linear-in-means model, when associations are endogenous, the effect of macro-group composition on behavior is non-linear and varies across individuals. We also show that larger groups facilitate sorting. Using data on associations among high school students, we provide a range of evidence consistent with our model. Individuals associate with people whose behaviors and characteristics are similar to their own. This tendency is stronger in large groups. We also show that behaviors vary within and between macro-groups in the way predicted by endogenous association.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13038.

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Date of creation: Apr 2007
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Handle: RePEc:nbr:nberwo:13038

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Cited by:
  1. Kata Mihaly, 2009. "Do More Friends Mean Better Grades?: Student Popularity and Academic Achievement," Working Papers 678, RAND Corporation Publications Department.
  2. Asphjell, Magne K. & Hensvik, Lena & Nilsson, J. Peter, 2013. "Businesses, Buddies, and Babies: Fertility and Social Interactions at Work," Working Paper Series, Center for Labor Studies 2013:8, Uppsala University, Department of Economics.
  3. Yann Bramoullé & Habiba Djebbari & Bernard Fortin, 2007. "Identification of Peer Effects through Social Networks," Cahiers de recherche 0705, CIRPEE.
  4. Yannis M. Ioannides & Giorgio Topa, 2009. "Neighborhood Effects: Accomplishments and Looking Beyond Them," Discussion Papers Series, Department of Economics, Tufts University 0736, Department of Economics, Tufts University.
  5. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, 09.

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