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Social Norms in Networks
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Social Norms in Networks

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  • Zenou, Yves
  • Ushchev, Philip

Abstract

Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this paper, we investigate how social norms affect individual effort, aggregate effort, and welfare. While individual productivity always positively affects own effort and utility, we show that taste for conformity has an ambiguous effect on individual outcomes and depends on whether an individual is above or below her own social norm. Equilibria are usually inefficient and, to restore the first best, the planner subsidizes (taxes) agents whose neighbors make efforts above (below) the social norms in equilibrium. Thus, provision of more subsidies to more central agents is not necessarily efficient.

Suggested Citation

  • Zenou, Yves & Ushchev, Philip, 2018. "Social Norms in Networks," CEPR Discussion Papers 13250, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13250
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    6. Liza Charroin, 2018. "Homophily, peer effects and dishonesty," Post-Print halshs-01993618, HAL.
    7. Meng, Dawen & Sun, Lei & Tian, Guoqiang, 2022. "Dynamic mechanism design on social networks," Games and Economic Behavior, Elsevier, vol. 131(C), pages 84-120.
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    9. Charroin, Liza & Fortin, Bernard & Villeval, Marie Claire, 2022. "Peer effects, self-selection and dishonesty," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 618-637.
    10. Antonio Cabrales & Esther Hauk, 2022. "Norms and the Evolution of Leaders' Followership," CESifo Working Paper Series 9845, CESifo.
    11. Kazutoshi Miyazawa & Hikaru Ogawa & Toshiki Tamai, 2018. "Tax Competition and Fiscal Sustainability," CIRJE F-Series CIRJE-F-1104, CIRJE, Faculty of Economics, University of Tokyo.
    12. Alastair Langtry, 2022. "Keeping up with "The Joneses": reference dependent choice with social comparisons," Papers 2203.10305, arXiv.org, revised Aug 2022.
    13. Lindquist, Matthew J. & Zenou, Yves, 2019. "Crime and Networks: 10 Policy Lessons," IZA Discussion Papers 12534, Institute of Labor Economics (IZA).
    14. Liza Charroin & Bernard Fortin & Marie Claire Villeval, 2022. "Peer effects, self-selection and dishonesty," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03712450, HAL.
    15. Zenou, Yves & Boucher, Vincent & Tumen, Semih & Vlassopoulos, Michael & Wahba, Jackline, 2020. "Ethnic Mixing in Early Childhood: Evidence from a Randomized Field Experiment and a Structural Model," CEPR Discussion Papers 15528, C.E.P.R. Discussion Papers.
    16. Allouch, Nizar & King, Maia, 2021. "Welfare targeting in networks," Journal of Mathematical Economics, Elsevier, vol. 96(C).
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    18. Edoardo Gallo & Joseph Lee & Yohanes Eko Riyanto & Erwin Wong, 2023. "Cooperation and Cognition in Social Networks," Papers 2305.01209, arXiv.org.
    19. Anufriev, Mikhail & Borissov, Kirill & Pakhnin, Mikhail, 2023. "Dissonance minimization and conversation in social networks," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 167-191.
    20. Jeong, Hanbat & Lee, Lung-fei, 2021. "Spatial dynamic game models for coevolution of intertemporal economic decision-making and spatial networks," Journal of Economic Dynamics and Control, Elsevier, vol. 129(C).
    21. Staab, Manuel, 2019. "The Formation of Social Groups under Status Concern," MPRA Paper 97114, University Library of Munich, Germany.
    22. Alexandra de Gendre & Nicolás Salamanca, 2020. "On the Mechanisms of Ability Peer Effects," Melbourne Institute Working Paper Series wp2020n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    23. Zenou, Yves & Itoh, Ryo & Sato, Yasuhiro, 2021. "Intergenerational Assimilation of Minorities: The Role of the Majority Group," CEPR Discussion Papers 16830, C.E.P.R. Discussion Papers.
    24. Liza Charroin & Bernard Fortin & Marie Claire Villeval, 2022. "Peer effects, self-selection and dishonesty," Post-Print hal-03712450, HAL.

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    More about this item

    Keywords

    Networks; Social norms; Welfare;
    All these keywords.

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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