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Homophily in Peer Groups

Baccara, Mariagiovanna and Yariv, Leeat (2013) Homophily in Peer Groups. American Economic Journal: Microeconomics, 5 (3). pp. 69-96. ISSN 1945-7669.

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The focus of this paper is the endogenous formation of peer groups. In our model agents choose peers before making contributions to public projects, and they differ in how much they value one project relative to another. Thus, the group's preference composition affects the type of contributions made. We characterize stable groups and find that they must be sufficiently homogeneous. We also provide conditions for some heterogeneity to persist as the group size grows large. In an application in which the projects entail information collection and sharing within the group, stability requires more similarity among extremists than among moderate individuals.

Item Type:Article
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URLURL TypeDescription DOIArticle
Alternate Title:Similarity and Polarization in Groups
Additional Information:© 2013 American Economic Association. This paper was previously circulated under the title “Similarity and Polarization in Groups.” We thank Heski Bar-Isaac, Tim Feddersen, Hugo Hopenhayn, Matt Jackson, Alessandro Lizzeri, Andrea Mattozzi, Maggie McConnell, Wolfgang Pesendorfer, Debraj Ray, Ronny Razin, and Bill Zame for helpful comments. Financial support from the National Science Foundation (SES 0963583) and the Gordon and Betty Moore Foundation (GBMF 1158) is gratefully acknowledged.
Funding AgencyGrant Number
NSFSES 0963583
Gordon and Betty Moore FoundationGBMF 1158
Issue or Number:3
Classification Code:JEL: D03; D71; D82; D83
Record Number:CaltechAUTHORS:20130829-152138210
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:41013
Deposited By: Tony Diaz
Deposited On:29 Aug 2013 22:31
Last Modified:03 Oct 2019 05:45

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