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Integration and diversity

Author

Listed:
  • Sanjeev Goyal
  • Pénélope Hernández

    (Kellogg School of Management - Northwestern University)

  • Guillem Martínez-Cánovas
  • Frédéric Moisan

    (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon)

  • Manuel Muñoz-Herrera
  • Ángel Sánchez

    (GAVAB - Grupo de Algorítmica para la Visión Artificial y la Biometría - URJC - Universidad Rey Juan Carlos [Madrid])

Abstract

We study a setting where individuals prefer to coordinate with others but they differ on their preferred action. Our interest is in understanding the role of link formation with others in shaping behavior. So we consider the situation in which interactions are exogenous and a situation where individuals choose links that determine the interactions. Theory is permissive in both settings: conformity (on either of the actions) and diversity (with different groups choosing their preferred actions) are both sustainable in equilibrium. We conduct an experiment to understand how link formation affects equilibrium selection. Our experiment reveals the powerful effect of linking on equilibrium selection: with an exogenous complete network, subjects choose to conform on the majority's preferred action. By contrast, with endogenous linking—irrespective of the costs of linking—subjects always opt for diversity of actions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sanjeev Goyal & Pénélope Hernández & Guillem Martínez-Cánovas & Frédéric Moisan & Manuel Muñoz-Herrera & Ángel Sánchez, 2020. "Integration and diversity," Post-Print halshs-03051962, HAL.
  • Handle: RePEc:hal:journl:halshs-03051962
    DOI: 10.1007/s10683-020-09676-6
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-03051962
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    Other versions of this item:

    • Sanjeev Goyal & Penélope Hernández & Guillem Martínez-Cánovas & Frédéric Moisan & Manuel Muñoz-Herrera & Angel Sánchez, 2021. "Integration and diversity," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 387-413, June.

    References listed on IDEAS

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    Cited by:

    1. Pinar Yildirim & Yanhao Wei & Christophe Bulte & Joy Lu, 2020. "Social network design for inducing effort," Quantitative Marketing and Economics (QME), Springer, vol. 18(4), pages 381-417, December.
    2. Herings, P. Jean-Jacques & Saulle, Riccardo & Seel, Christian, 2018. "The Last will be First, and the First Last: Segregation in Societies with Positional Externalities," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    3. Herings, P. Jean-Jacques & Saulle, Riccardo & Seel, Christian, 2020. "The Last will be First, and the First Last: Segregation in Societies with Relative Payoff Concerns (RM/18/027-revised-)," Research Memorandum 011, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Meng, Delong, 2021. "Learning from like-minded people," Games and Economic Behavior, Elsevier, vol. 126(C), pages 231-250.
    5. Jonathan Norris, 2019. "Identify economics: social influence and skill development," Working Papers 1908, University of Strathclyde Business School, Department of Economics.

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    More about this item

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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