Weinberg, Bruce A. (2007). Social interactions with endogenous associations. National Bureau of Economic Research Working Paper Series.
vol. No. 13038
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.
Author contact info: Bruce A. Weinberg Department of Economics Ohio State University 410 Arps Hall 1945 North High Street Columbus, OH 43210 Tel: 614/292-5642 Fax: 614/292-3906 E-Mail: firstname.lastname@example.org
National Bureau of Economic Research Working Paper Series
Weinberg, Bruce A.