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Social Interactions and Economic Behavior

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  • Giulio Zanella

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Abstract

This paper is a critical introduction to the new wave of economic literature on the effect of social interactions on individual behavior and aggregate economic outcomes. I refer to this research program, also known as new social economics, as the socioeconomic analysis of behavior, to distinguish it from the more popular economic analysis of social behavior. I discuss the main features of so-called interactions-based models, and I show how they help us to understand substantive economic phenomena. In order to restrict the focus, I choose five possible applications: matching in the labor market, welfare participation, poverty traps and inequality, investor behavior, and consumer behavior. Then I dwell upon two key undecided questions: (i) why economic behavior is affected by social interactions, and (ii) how the social context is shaped by rational individuals. Finally, I briefly discuss the main empirical routes so far used.

Suggested Citation

  • Giulio Zanella, 2004. "Social Interactions and Economic Behavior," Department of Economics University of Siena 441, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:441
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    File URL: http://repec.deps.unisi.it/quaderni/441.pdf
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    References listed on IDEAS

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    Cited by:

    1. Dong, Bin & Torgler, Benno, 2012. "Corruption and social interaction: Evidence from China," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 932-947.
    2. Zhao Chen & Shiqing Jiang & Ming Lu & Hiroshi Sato, 2008. "How Do Heterogeneous Social Interactions Affect the Peer Effect in Rural-Urban Migration?: Empirical Evidence from China," Global COE Hi-Stat Discussion Paper Series gd08-008, Institute of Economic Research, Hitotsubashi University.
    3. Auld, M. Christopher, 2011. "Effect of large-scale social interactions on body weight," Journal of Health Economics, Elsevier, vol. 30(2), pages 303-316, March.
    4. Georgia S. Papoutsi & Andreas C. Drichoutis & Rodolfo M. Nayga Jr., 2013. "The Causes Of Childhood Obesity: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 743-767, September.
    5. Aldashev, Gani, 2010. "Political Information Acquisition for Social Exchange," Quarterly Journal of Political Science, now publishers, vol. 5(1), pages 1-25, April.
    6. Katarzyna Ostasiewicz & Michal H. Tyc & Piotr Goliczewski & Piotr Magnuszewski & Andrzej Radosz & Jan Sendzimir, 2006. "Integrating economic and psychological insights in binary choice models with social interactions," Papers physics/0609170, arXiv.org.

    More about this item

    Keywords

    new social economics; social interactions; neighborhood effects; social networks; social norms; social multiplier;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • Z19 - Other Special Topics - - Cultural Economics - - - Other

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