IDEAS home Printed from https://ideas.repec.org/p/ecm/nawm04/287.html
   My bibliography  Save this paper

Topologies Of Social Interactions

Author

Listed:
  • Yannis M. Ioannides

Abstract

We examine in this paper the role of an economy's social interaction structure, defined as a graph. Individuals care about the decisions of their neighbors. We extend the behavioral discrete-response rules along the lines of the interactive discrete choice model of Brock and Durlauf (2001) to static and dynamic settings and also explore properties of a richer class of {\em anisotropic} equilibria in the context of richer social interaction topologies, such as circular interaction and one-dimensional lattice. We examine the model where individuals make decisions on the basis of observations on the actual decisions of their neighbors in a static setting and explored some of the issues that come up in dynamic settings. In the static case, we accomplish this by exploiting the properties of Markov random fields as Gibbs states. We also link interactive discrete choice models with the econometric theory of simultaneous systems of equations modelling discrete decisions. We examine the role of closure in social structure. With local interaction either in the form of circular or of interaction along a line, synergistic effects lead to spatial oscillations and clustering, with the ``most unstable'' states pushing the economy away from the symmetric isotropic outcome, which is unstable. We obtain general results for the dynamics of adjustment towards isotropic equilibria and shows that they combine spectral properties of the adjacency matrix with those associated with the nonlinearity of the reaction functions that lead to multiplicity of steady states. When all agents have the same number of neighbors the dynamics of adjustment exhibit relative persistence. Cyclical interaction is associated with endogenous and generally transient spatial oscillations that take the form of islands of conformity. The paper also examines stochastic dynamics for general interaction topologies. Yannis M. Ioannides Department of Economics Tufts University Medford, MA 02155 Voice: 617 627 3294 Fax: 617 627 3917 yannis.ioannides@tufts.edu www.tufts.edu/~yioannid

Suggested Citation

  • Yannis M. Ioannides, 2004. "Topologies Of Social Interactions," Econometric Society 2004 North American Winter Meetings 287, Econometric Society.
  • Handle: RePEc:ecm:nawm04:287
    as

    Download full text from publisher

    File URL: http://repec.org/esNAWM04/up.32053.1049081236.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Edward L. Glaeser & Bruce Sacerdote & José A. Scheinkman, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 507-548.
    3. Bisin, Alberto & Horst, Ulrich & Ozgur, Onur, 2006. "Rational expectations equilibria of economies with local interactions," Journal of Economic Theory, Elsevier, vol. 127(1), pages 74-116, March.
    4. Ellison, Glenn, 1993. "Learning, Local Interaction, and Coordination," Econometrica, Econometric Society, vol. 61(5), pages 1047-1071, September.
    5. Karen Eggleston, 2001. "Multitasking, Competition and Provider Payment," Discussion Papers Series, Department of Economics, Tufts University 0101, Department of Economics, Tufts University.
    6. Puga, Diego & Venables, Anthony J., 1997. "Preferential trading arrangements and industrial location," Journal of International Economics, Elsevier, vol. 43(3-4), pages 347-368, November.
    7. Matthew Haag & Roger Lagunoff, 2006. "Social Norms, Local Interaction, And Neighborhood Planning ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 265-296, February.
    8. 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.
    9. Horst, Ulrich & Scheinkman, Jose A., 2006. "Equilibria in systems of social interactions," Journal of Economic Theory, Elsevier, vol. 130(1), pages 44-77, September.
    10. Chen, Hsiao-Chi & Friedman, James W. & Thisse, Jacques-Francois, 1997. "Boundedly Rational Nash Equilibrium: A Probabilistic Choice Approach," Games and Economic Behavior, Elsevier, vol. 18(1), pages 32-54, January.
    11. Kooreman, Peter & Soetevent, Adriaan, 2002. "A discrete choice model with social interactions: an analysis of high school teen behavior," CCSO Working Papers 200214, University of Groningen, CCSO Centre for Economic Research.
    12. Edward L. Glaeser & Jose Scheinkman, 2000. "Non-Market Interactions," NBER Working Papers 8053, National Bureau of Economic Research, Inc.
    13. Venkatesh Bala & Sanjeev Goyal, 1998. "Learning from Neighbours," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 595-621.
    14. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
    15. 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.
    16. Quah, Danny, 2000. "Internet cluster emergence," European Economic Review, Elsevier, vol. 44(4-6), pages 1032-1044, May.
    17. repec:dgr:rugccs:200214 is not listed on IDEAS
    18. Stephen Morris, 2000. "Contagion," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 57-78.
    19. Strange, William, 1992. "Overlapping neighborhoods and housing externalities," Journal of Urban Economics, Elsevier, vol. 32(1), pages 17-39, July.
    20. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
    21. Lawrence Blume & Steven Durlauf, 2003. "Equilibrium Concepts for Social Interaction Models," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 193-209.
    22. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    23. David Cass & Menahem E. Yaari, 1966. "A Re-examination of the Pure Consumption Loans Model," Journal of Political Economy, University of Chicago Press, vol. 74, pages 353-353.
    24. Yannis M. Ioannides, 1996. "Evolution of Trading Structures," Working Papers 96-04-020, Santa Fe Institute.
    25. Danny Quah, 2000. "Internet Cluster Emergence," CEP Discussion Papers dp0441, Centre for Economic Performance, LSE.
    26. Soetevent, Adriaan R., 2003. "Equilibrium properties of finite binary choice games," CCSO Working Papers 200314, University of Groningen, CCSO Centre for Economic Research.
    27. Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
    28. repec:dgr:rugccs:200314 is not listed on IDEAS
    29. Quah, Danny, 2000. "Internet cluster emergence," LSE Research Online Documents on Economics 2220, London School of Economics and Political Science, LSE Library.
    30. Elie Tamer, 2003. "Incomplete Simultaneous Discrete Response Model with Multiple Equilibria," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 147-165.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, September.
    2. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    3. Opolot, Daniel & Azomahou, Theophile, 2012. "Learning and convergence in networks," MERIT Working Papers 2012-074, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Le Breton, Michel & Weber, Shlomo, 2009. "Existence of Pure Strategies Nash Equilibria in Social Interaction Games with Dyadic Externalities," CEPR Discussion Papers 7279, C.E.P.R. Discussion Papers.
    5. Blume,L.E. & Durlauf,S.N., 2005. "Identifying social interactions : a review," Working papers 12, Wisconsin Madison - Social Systems.
    6. Grajzl, Peter & Baniak, Andrzej, 2012. "Mandating behavioral conformity in social groups with conformist members," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 479-493.
    7. Dunia López-Pintado & Duncan J. Watts, 2008. "Social Influence, Binary Decisions and Collective Dynamics," Rationality and Society, , vol. 20(4), pages 399-443, November.
    8. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    9. Horst, Ulrich & Scheinkman, Jose A., 2006. "Equilibria in systems of social interactions," Journal of Economic Theory, Elsevier, vol. 130(1), pages 44-77, September.
    10. Azomahou, T. & Opolot, D., 2014. "Stability and strategic diffusion in networks," MERIT Working Papers 2014-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. 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.
    12. Horst, Ulrich, 2010. "Dynamic systems of social interactions," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 158-170, February.
    13. Tolotti, Marco & Yepez, Jorge, 2020. "Hotelling-Bertrand duopoly competition under firm-specific network effects," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 105-128.
    14. Andrea Morone & Piergiuseppe Morone & Richard Taylor, 2007. "A laboratory experiment of knowledge diffusion dynamics," Springer Books, in: Uwe Cantner & Franco Malerba (ed.), Innovation, Industrial Dynamics and Structural Transformation, pages 283-302, Springer.
    15. Dai, Darong, 2012. "On the Existence of Pareto Optimal Endogenous Matching," MPRA Paper 43125, University Library of Munich, Germany.
    16. Musatov, Daniil & Savvateev, Alexei & Weber, Shlomo, 2016. "Gale–Nikaido–Debreu and Milgrom–Shannon: Communal interactions with endogenous community structures," Journal of Economic Theory, Elsevier, vol. 166(C), pages 282-303.
    17. Opolot, Daniel, 2012. "Social interactions and complex networks," MERIT Working Papers 2012-014, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    18. Azomahou, T. & Opolot, D., 2014. "Epsilon-stability and the speed of learning in network games," MERIT Working Papers 036, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Horst, Ulrich, 2005. "Stationary equilibria in discounted stochastic games with weakly interacting players," Games and Economic Behavior, Elsevier, vol. 51(1), pages 83-108, April.
    20. Ryo Nakajima, 2007. "Measuring Peer Effects on Youth Smoking Behaviour," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 897-935.

    More about this item

    Keywords

    Discrete regression and qualitative choice models;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ecm:nawm04:287. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/essssea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.