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How (not) to Choose Peers in Studying Groups

Author

Listed:
  • Thomas Gall

    (University of Bonn)

  • Roland Amann

    (University of Konstanz)

Abstract

This paper analyzes social group formation when agents are subject to peer effects within groups increasing human capital and instantaneous utility. When agents are heterogeneous on two dimensions, ability and social skills, and monetary payments are not feasible the model predicts segregation at the top and at the bottom of the attribute space and bunching for heterogeneous intermediate types. Groups may be heterogeneous in taste types and more heterogeneous types are more likely to participate. The equilibrium allocation does not induce cost-efficient human capital accumulation. Introducing ability tracking may produce beneficial results despite decreasing differences in human capital production.

Suggested Citation

  • Thomas Gall & Roland Amann, 2006. "How (not) to Choose Peers in Studying Groups," Working Papers 2006.79, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2006.79
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Education; Peer-effects; Matching; Group Formation;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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