IDEAS home Printed from https://ideas.repec.org/p/arx/papers/physics-0609170.html
   My bibliography  Save this paper

Integrating economic and psychological insights in binary choice models with social interactions

Author

Listed:
  • Katarzyna Ostasiewicz
  • Michal H. Tyc
  • Piotr Goliczewski
  • Piotr Magnuszewski
  • Andrzej Radosz
  • Jan Sendzimir

Abstract

We investigate a class of binary choice models with social interactions. We propose a unifying perspective that integrates economic models using a utility function and psychological models using an impact function. A general approach for analyzing the equilibrium structure of these models within mean-field approximation is developed. It is shown that within a mean-field approach both the utility function and the impact function models are equivalent to threshold models. The interplay between heterogeneity and randomness in model formulation is discussed. A general framework is applied in a number of examples leading to some well-known models but also showing the possibility of more complex dynamics related to multiple equilibria. Our synthesis can provide a basis for many practical applications extending the scope of binary choice models.

Suggested Citation

  • Katarzyna Ostasiewicz & Michal H. Tyc & Piotr Goliczewski & Piotr Magnuszewski & Andrzej Radosz & Jan Sendzimir, 2006. "Integrating economic and psychological insights in binary choice models with social interactions," Papers physics/0609170, arXiv.org.
  • Handle: RePEc:arx:papers:physics/0609170
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/physics/0609170
    File Function: Latest version
    Download Restriction: no

    References listed on IDEAS

    as
    1. James J. Heckman, 2001. "Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel Lecture," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 673-748, August.
    2. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 531-542.
    3. Horst, Ulrich & Scheinkman, Jose A., 2006. "Equilibria in systems of social interactions," Journal of Economic Theory, Elsevier, vol. 130(1), pages 44-77, September.
    4. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    5. Hołyst, Janusz A. & Kacperski, Krzysztof & Schweitzer, Frank, 2000. "Phase transitions in social impact models of opinion formation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 285(1), pages 199-210.
    6. Steven N. Durlauf, 1993. "Nonergodic Economic Growth," Review of Economic Studies, Oxford University Press, vol. 60(2), pages 349-366.
    7. repec:wsi:ijmpcx:v:11:y:2000:i:06:n:s0129183100000936 is not listed on IDEAS
    8. Durlauf, Steven N, 1991. "Multiple Equilibria and Persistence in Aggregate Fluctuations," American Economic Review, American Economic Association, vol. 81(2), pages 70-74, May.
    9. William A. Brock, 1993. "Pathways to randomness in the economy: Emergent nonlinearity and chaos in economics and finance," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 8(1), pages 3-55.
    10. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 235-260.
    11. Yannis M. Ioannides & Jeffrey E. Zabel, 2003. "Neighbourhood effects and housing demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 563-584.
    12. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
    13. Brian Krauth, 2006. "Social interactions in small groups," Canadian Journal of Economics, Canadian Economics Association, vol. 39(2), pages 414-433, May.
    14. Katarzyna Sznajd-Weron & Józef Sznajd, 2000. "Opinion Evolution In Closed Community," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 11(06), pages 1157-1165.
    15. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-493, May.
    16. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    17. Durlauf, Steven N., 2004. "Neighborhood effects," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 50, pages 2173-2242 Elsevier.
    18. Lindbeck, Assar, 1997. "Incentives and Social Norms in Household Behavior," American Economic Review, American Economic Association, vol. 87(2), pages 370-377, May.
    19. Galam, Serge, 1997. "Rational group decision making: A random field Ising model at T = 0," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 238(1), pages 66-80.
    20. Olivier Barreteau & François Bousquet & Jean-Marie Attonaty, 2001. "Role-Playing Games for Opening the Black Box of Multi-Agent Systems: Method and Lessons of Its Application to Senegal River Valley Irrigated Systems," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 4(2), pages 1-5.
    21. Giulio Zanella, 2004. "Social Interactions and Economic Behavior," Department of Economics University of Siena 441, Department of Economics, University of Siena.
    22. Gligor, Mircea & Ignat, Margareta, 2001. "Some demographic crashes seen as phase transitions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 301(1), pages 535-544.
    23. Jager, W. & Janssen, M. A. & De Vries, H. J. M. & De Greef, J. & Vlek, C. A. J., 2000. "Behaviour in commons dilemmas: Homo economicus and Homo psychologicus in an ecological-economic model," Ecological Economics, Elsevier, vol. 35(3), pages 357-379, December.
    24. Steven N. Durlauf, 2005. "Complexity and Empirical Economics," Economic Journal, Royal Economic Society, vol. 115(504), pages 225-243, June.
    25. Levy, Moshe, 2005. "Social phase transitions," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 71-87, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:physics/0609170. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (arXiv administrators). General contact details of provider: http://arxiv.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.