TY  - JOUR
AU  - Weinberg,Bruce A.
TI  - Social Interactions with Endogenous Associations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13038
PY  - 2007
Y2  - April 2007
UR  - http://www.nber.org/papers/w13038
L1  - http://www.nber.org/papers/w13038.pdf
N1  - 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: weinberg.27@osu.edu
AB  - 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.
ER  -