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Discrete Choice with Social Interactions I: Theory Author info | Abstract | Publisher info | Download info | Related research | Statistics William A. Brock
Steven N. Durlauf
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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.
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Paper provided by Santa Fe Institute in its series Working Papers with number
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Date of creation: Oct 1995Date of revision:
Handle: RePEc:wop:safiwp:95-10-084Contact details of provider: Postal: 1399 Hyde Park Road, Santa Fe, New Mexico 87501 Web page: http://www.santafe.edu/sfi/publications/working-papers.html More information through EDIRC
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: William A. Brock, 1993.
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