Doctoral Dissertation Research in Economics: Social Comparisons in Peer Effects

University Of California-San Diego, La Jolla CA

Investigators

Abstract

Understanding the sources of social conformity is important because it is a very common phenomenon that affects social and economic outcomes. Economic models of conforming to social norms assume that people conform either because of material incentives or to avoid punishment. This research project will use economic theory and laboratory experiments to study why people conform to social norms when there are no material incentives to do so or punishment for deviating from those norms. The theory is based on the idea that individuals want to judge themselves in a positive way but lack a direct way of evaluating themselves. As a result, individuals look at the actions of their peers to form the positive image of themselves, allowing them to form a better image of themselves. Comparing one?s behavior to their peer?s lead to a better understanding of social conformity that does not require material incentives or punishment. The researchers will then conduct laboratory experiments to test this theory. The results of this research project will provide an input into the formulation of policies to enhance social cohesion. The project will support a doctoral dissertation research and therefore contributes to growth of US's economic research capital and global leadership in economics research. Economic theories of social conformity based on sanctions, social signaling, or adherence to social norms cannot explain why there is conformity among those whose actions are not likely to be seen by others, nor do they address the environment in which peer effects may be strong. This research project seeks to deepen understanding of why social conformity arises in the absence of material incentives with a unified theory and two experiments. The theory posits that individuals have an intrinsic desire to judge and evaluate themselves positively. Lacking objective means of self-evaluation, individuals rely on social comparisons to better understand what their choices reveal about themselves. By deriving behavioral conformity from self-image, the model establishes a scope for peer effects without observable incentives or the pressures of social stigma. Two experiments are then conducted to test the predictions of this model. The first experiment tests whether individuals follow a pattern of peer effects that is uniquely consistent with self-image evaluation. The second experiment tests whether a noisier signal mitigates peer effects by garbling the information peer-behavior provides. The effects of social interaction on individual decisions is quite broad and a better understanding of how self-evaluation through social comparisons drives social conformity will provide explanation of empirical observations of this phenomenon as well as provide policy makers with information as to when peer effects are likely to be strong. The results of this research project have many broader impacts, not only from application to fields of economics, but also in areas of public policy, business, and education. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.