TY  - JOUR
AU  - Heavner,D. Lee
AU  - Lochner,Lance
TI  - Social Networks and the Aggregation on Individual Decisions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8979
PY  - 2002
Y2  - June 2002
UR  - http://www.nber.org/papers/w8979
L1  - http://www.nber.org/papers/w8979.pdf
N1  - Author contact info:
Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON  N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca
AB  - This paper analyzes individual decisions to participate in an activity and the aggregation of those decisions when individuals gather information about the outcomes and choices of (a few) others in their social network.  In this environment, aggregate participation rates are generally inefficient.  Increasing the size of social networks does not necessarily increase efficiency and can lead to less efficient long-run outcomes.  Both subsidies for participation and penalties for non-participation can increase participation rates, though not necessarily by the same amount.  Punishing non-participation has much greater effects on participation rates than rewarding participation when current rates are very low.  A program that provides youth with mentors who have participated themselves can increase participation rates, especially when those rates are low.  Finally, communities plagued by the flight of successful participants will experience lower short- and long-run participation rates.
ER  -