Homophily and influence

Polanski, Arnold ORCID: https://orcid.org/0000-0001-9146-6364 and Vega-Redondo, Fernando (2023) Homophily and influence. Journal of Economic Theory, 207. ISSN 0022-0531

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We study how learning and influence co-evolve in a social network by extending the classical model of DeGroot (1974) in two fundamental ways: (a) opinions are multidimensional and the learning time-span is arbitrary; (b) the effective social network is endogenously shaped by opinion-based homophily. Our analysis starts by establishing the existence of an equilibrium where, following (a)-(b), the learning outcome and the social network are jointly determined. This is followed by its characterization in some simple contexts. Next, we show that, at equilibrium, the strength of the link between any two agents is always given by its “support” – roughly, the amount of third-party (indirect) influence impinging on both agents. This result leads to the key insight that distinct groups may fail to integrate if their (possibly many) cross-group links lack sufficient support. Building on this, we identify sets of conditions for which social fragmentation is robust (i.e. dynamically stable) or even the unique equilibrium.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Groups > Economic Theory
Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance
Depositing User: LivePure Connector
Date Deposited: 22 Nov 2022 11:31
Last Modified: 29 Jan 2023 06:30
URI: https://ueaeprints.uea.ac.uk/id/eprint/89946
DOI: 10.1016/j.jet.2022.105576

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