Behavioral influence

Christopher Chambers, Tugce Cuhadaroglu, Yusufcan Masatlioglu

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    Abstract

    In the context of stochastic choice, we introduce an individual decision model which admits a cardinal notion of peer influence. The model presumes that individual choice is not only determined by idiosyncratic evaluations of alternatives but also by the influence from the observed behavior of others. We establish that the equilibrium defined by the model is unique, stable and falsifiable. Moreover the underlying preference and influence parameters as well as the structure of the underlying network are uniquely identified from, arguably, limited data. The baseline model includes two individuals with conformity motives. Generalizations to multi-individual settings and negative interactions are also introduced and analyzed.
    Original languageEnglish
    Article numberjvac028
    Pages (from-to)135–166
    Number of pages31
    JournalJournal of the European Economic Association
    Volume21
    Issue number1
    Early online date30 May 2022
    DOIs
    Publication statusPublished - 1 Feb 2023

    Keywords

    • Identification of social interactions
    • Negative influence
    • Conformity
    • Stochastic choice
    • Peer effects
    • Social influence

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