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Reference group influence on binary choices dynamics

Author

Listed:
  • Arianna Dal Forno

    (University of Molise)

  • Ugo Merlone

    (University of Torino)

Abstract

The recent literature has analyzed binary choices dynamics providing interesting results. Most of these contributions consider interactions within a single group. Nevertheless, in some situations the interaction takes place not only within a single group but also between different groups. In this paper, we investigate the choice dynamics when considering two populations where one serves as a reference group. Considering this influence effect enriches the dynamics. Although the structurally stable resulting dynamics are attracting cycles only, with any positive integer period, the reference group makes the dynamics of the influenced population much more complex. We considered both the possibility that the reference group has the same or the opposite attitude toward the distribution over the choices. We show how the dynamics and the bifurcation structure are modified under the influence of the reference group. Our results illustrate how the propensity to switch choices in the reference groups may, indirectly, affect choices in the first group.

Suggested Citation

  • Arianna Dal Forno & Ugo Merlone, 2018. "Reference group influence on binary choices dynamics," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 427-445, November.
    • Handle: RePEc:spr:decfin:v:41:y:2018:i:2:d:10.1007_s10203-018-0216-1
    DOI: 10.1007/s10203-018-0216-1
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    References listed on IDEAS

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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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