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Behavioral Influence

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  • Christopher P
  • Tugce Cuhadaroglu
  • Yusufcan Masatlioglu

Abstract

In the context of stochastic choice, we introduce an individual decision model that admits a cardinal notion of peer influence. The model presumes that individual choice is not only determined by idiosyncratic evaluations of alternatives but also by the influence of the observed behavior of others. We establish that the equilibrium defined by the model is unique, stable, and falsifiable. Moreover, the underlying preferences and influence parameters as well as the structure of the underlying network are uniquely identified from, arguably, limited data. The baseline model includes two individuals with conformity motives. Generalizations to multi-individual settings and negative interactions are also introduced and analyzed.

Suggested Citation

  • Christopher P & Tugce Cuhadaroglu & Yusufcan Masatlioglu, 2023. "Behavioral Influence," Journal of the European Economic Association, European Economic Association, vol. 21(1), pages 135-166.
    • Handle: RePEc:oup:jeurec:v:21:y:2023:i:1:p:135-166.
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    References listed on IDEAS

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    1. Steven Berry & James Levinsohn & Ariel Pakes, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 68-105, February.
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