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Social Norms in Networks

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  • Ushchev, Philip

    (National Research University)

  • Zenou, Yves

    (Monash Universitiy)

Abstract

Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this study, we develop a social-norm model that provides a micro foundation of the linear-in-means model and investigate its properties. We show that individual outcomes may increase, decrease, or vary non-monotonically with the taste for conformity. Equilibria are usually inefficient and, to restore the first best, the planner needs to subsidize (tax) agents whose neighbors make efforts above (below) the social norms. Thus, giving more subsidies to more central agents is not necessarily efficient. We also discuss the policy implications of our model in terms of education and crime.

Suggested Citation

  • Ushchev, Philip & Zenou, Yves, 2019. "Social Norms in Networks," Working Paper Series 1302, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:1302
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    8. Alastair Langtry, 2022. "Keeping up with "The Joneses": reference dependent choice with social comparisons," Papers 2203.10305, arXiv.org.
    9. Staab, Manuel, 2019. "The Formation of Social Groups under Status Concern," MPRA Paper 97114, University Library of Munich, Germany.
    10. Alexandra de Gendre & Nicolás Salamanca, 2020. "On the Mechanisms of Ability Peer Effects," Melbourne Institute Working Paper Series wp2020n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    11. Itoh, Ryo & Sato, Yasuhiro & Zenou, Yves, 2021. "Intergenerational Assimilation of Minorities: The Role of the Majority Group," CEPR Discussion Papers 16830, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Social norms; Conformism; Local-average model; Welfare; Anti-conformism; Network formation;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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