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Social Interactions with Endogenous Associations

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  • Bruce A. Weinberg

Abstract

This paper develops a model of social interactions with endogenous association. People are assumed to invest in relationships to maximize their utility. Even in a linear-in-means model, when associations are endogenous, the effect of macro-group composition on behavior is non-linear and varies across individuals. We also show that larger groups facilitate sorting. Using data on associations among high school students, we provide a range of evidence consistent with our model. Individuals associate with people whose behaviors and characteristics are similar to their own. This tendency is stronger in large groups. We also show that behaviors vary within and between macro-groups in the way predicted by endogenous association.

Suggested Citation

  • Bruce A. Weinberg, 2007. "Social Interactions with Endogenous Associations," NBER Working Papers 13038, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13038
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    Cited by:

    1. Stephen Billings & David Deming & Stephen L. Ross, 2016. "Partners in Crime: Schools, Neighborhoods and the Formation of Criminal Networks," Working Papers 2016-006, Human Capital and Economic Opportunity Working Group.
    2. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, September.
    3. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, Elsevier.
    4. Bramoullé, Yann & Djebbari, Habiba & Fortin, Bernard, 2009. "Identification of peer effects through social networks," Journal of Econometrics, Elsevier, vol. 150(1), pages 41-55, May.
    5. Timothy J. Halliday & Sally Kwak, 2012. "What is a peer? The role of network definitions in estimation of endogenous peer effects," Applied Economics, Taylor & Francis Journals, vol. 44(3), pages 289-302, January.
    6. Kata Mihaly, 2009. "Do More Friends Mean Better Grades? Student Popularity and Academic Achievement," Working Papers 678, RAND Corporation.
    7. Ida Johnsson & Hyungsik Roger Moon, 2017. "Estimation of Peer Effects in Endogenous Social Networks: Control Function Approach," Papers 1709.10024, arXiv.org.
    8. Yannis M. Ioannides & Giorgio Topa, 2010. "Neighborhood Effects: Accomplishments And Looking Beyond Them," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 343-362.
    9. Asphjell, Magne K. & Hensvik, Lena & Nilsson, J. Peter, 2013. "Businesses, Buddies, and Babies: Fertility and Social Interactions at Work," Working Paper Series, Center for Labor Studies 2013:8, Uppsala University, Department of Economics.
    10. Hsieh, Chih-Sheng & Lee, Lung fei, 2017. "Specification and Estimation of Network Formation and Network Interaction Models with the Exponential Probability Distribution," MPRA Paper 60726, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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