Studies of Social Structure and Economic Behavior

Stanford University, Stanford CA

Investigators

Abstract

The network structure of relationships underlies a number of social, economic and political interactions. Who a person knows affects their behavior and well-being in many ways including which jobs they find, which products they buy, what their political opinions are, and even whether or not they engage in criminal activities, among many other things. It is also well-documented that there is a strong tendency for people to interact with other people who are similar to themselves. This is known as ''homophily'' and has been documented in terms of ethnicity, gender, political affiliation, age, religion, profession, and a variety of other socio-economic categories. Moreover, there is evidence that interaction patterns differ depending on group size (e.g., minority groups are more likely to interact with each other). This project develops models that provide theoretical predictions concerning social network formation in the presence of a diversity of types of individuals, as well as modeling the diffusion of behavior on networks that exhibit segregation. A first part of this research develops models of how friendships and other relationships form in a world where individuals are of distinct types and have higher values of interacting with their own types. The theory is based on a variation of a ''search'' model, where individuals randomly meet each other and then choose whether or not to form a relationship, or whether to continue to search. More populous types find it relatively easier to meet each other, and this affects the tendency of different groups to form inter-group friendships. This stark model provides a rich set of predicted behaviors. It offers new insights into the level of integration of a population and how inter-group ties depend on population sizes. A second part of this research develops predictions of behavior in settings where heterogeneous individuals are interconnected, but with some level of segregation. This extends existing models of contagion as well as the diffusion of behavior (adoption of technologies, information transmission, etc.) to situations where the network of interactions exhibits some level of segregation. This provides a deeper understanding of when and to what extent behavior differs across partly segregated groups and how this depends on their population size and social structures. It deepens the understanding of how the segregation level of a network affects the initial thresholds for the diffusion of behavior, as well as overall eventual adoption rates in a population. A third part of the research bridges these first two parts, where the decisions with whom to interact depend not only on an individual's type, but also on their anticipated behavior. The broader impact of the project involves providing models that serve as a basis for empirical research on social structure, segregation, and the diffusion of various economic behaviors. It also provides new insight into the understanding of ''diversity'' and integration, and helps in developing policies aimed at improving social welfare.