Citation
Currarini, S.; Jackson, M. O.; & Pin, P. (2009). An economic model of friendship: Homophily, minorities, and segregation. Econometrica. vol. 77 (4) pp. 1003-1045Abstract
We develop a model of friendship formation that sheds light on segregation patterns observed in social and economic networks. Individuals have types and see type-dependent benefits from friendships. We examine the properties of a steady-state equilibrium of a matching process of friendship formation. We use the model to understand three empirical patterns of friendship formation: (i) larger groups tend to form more same-type ties and fewer other-type ties than small groups, (ii) larger groups form more ties per capita, and (iii) all groups are biased towards same-type relative to demographics, with the most extreme bias coming from middle-sized groups. We show how these empirical observations can be generated by biases in preferences and biases in meetings. We also illustrate some welfare implications of the model.URL
http://dx.doi.org/10.3982%2FECTA7528Reference Type
Journal ArticleJournal Title
EconometricaAuthor(s)
Currarini, S.Jackson, M. O.
Pin, P.