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Social Interactions with Endogenous Associations

  • Bruce A. Weinberg

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.

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File URL: http://www.nber.org/papers/w13038.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13038.

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Date of creation: Apr 2007
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Handle: RePEc:nbr:nberwo:13038
Note: CH ED LS
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