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Expectation Formation and Social Influence

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  • Andreas Karpf

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, Axe Economie mathématique et jeux - CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This article investigate the role of social influence for the expectation formation of economic agents. Using self-organizing Kohonen maps the repeated cross-section data set of the University of Michigan consumer survey is transformed into a pseudo panel allowing to monitor the expectation formation of cohorts with regard to business confidence over the whole available time span (January 1978 - June 2013). Subsequently the information theoretic concept of transfer entropy is used to reveal the role of social influence on the expectation formation as well as the underlying network structure. It is shown that social influence strongly depends on socio-demographic characteristics and also coincides with a high degree of connectivity. The social network estimated in this way follows a power-law and thus exhibits similar structure as networks observed in other contexts.

Suggested Citation

  • Andreas Karpf, 2014. "Expectation Formation and Social Influence," Post-Print halshs-00951588, HAL.
    • Handle: RePEc:hal:journl:halshs-00951588
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00951588
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    References listed on IDEAS

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    1. Wehrens, Ron & Buydens, Lutgarde M. C., 2007. "Self- and Super-organizing Maps in R: The kohonen Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 21(i05).
    2. Charles F. Manski, 2000. "Economic Analysis of Social Interactions," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 115-136, Summer.
    3. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    4. Marie Cottrell & Patrice Gaubert, 2003. "Efficient estimators : the use of neural networks to construct pseudo panels," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00122817, HAL.
    5. Burnkrant, Robert E & Cousineau, Alain, 1975. "Informational and Normative Social Influence in Buyer Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 2(3), pages 206-215, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Social networks; expectations; household survey; Réseau social; anticipations; enquête auprès des ménages;
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