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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/28427
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| Title: | Social Networking and Individual Outcomes: Individual Decisions
andMarket Context |
| Authors: | Ioannides, Yannis M. - Tufts University
Soetevent, Adriaan R. - University of Amsterdam and Tinbergen Institute |
| Keywords: | Social Interactions, Social Networks, Neighborhood Effects, Endogenous
Networking, Social Intermediation, Econometric Identification, Strong
versus Weak Ties, Value of Social Connections |
| Issue Date: | 2005 |
| Series/Report no.: | NET Institute Working Paper;05-16 |
| Abstract: | This paper examines social interactions when social networking is
endogenous. It employs a linear-quadratic model that accommodates
contextual effects, and endogenous local interactions, that is where
individuals react to the decisions of their neighbors, and endogenous
global ones, where individuals react to the mean decision in the
economy, both with a lag. Unlike the simple V AR(1) structural model of
individual interactions, the planner's problem here involves
intertemporal optimization and leads to a system of linear difference
equations with expectations. It highlights an asset-like property of
socially optimal outcomes in every period which helps characterize the
shadow values of connections among agents. Endogenous networking is
easiest to characterize when individuals choose weights of social
attachment to other agents. It highlights a simultaneity between
decisions and patterns of social attachment. The paper also poses the
inverse social interactions problem, asking whether it is possible to
design a social network whose agents' decisions will obey an arbitrarily
specified variance covariance matrix. |
| URI: | http://hdl.handle.net/2451/28427 |
| Appears in Collections: | NET Institute Working Papers Series
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