Social norms in networks

Philip Ushchev, Yves Zenou

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)

Abstract

Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this study, we develop a social-norm model that provides a microfoundation of the linear-in-means model and investigate its properties. We show that individual outcomes may increase, decrease, or vary non-monotonically with the taste for conformity. Equilibria are usually inefficient and, to restore the first best, the planner needs to subsidize (tax) agents whose neighbors make efforts above (below) the social norms. Thus, giving more subsidies to more central agents is not necessarily efficient. We also discuss the policy implications of our model in terms of education and crime.

Original languageEnglish
Article number104969
Number of pages32
JournalJournal of Economic Theory
Volume185
DOIs
Publication statusPublished - Jan 2020

Keywords

  • Anti-conformism
  • Conformism
  • Local-average model
  • Network formation
  • Social norms
  • Welfare

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