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Similarity and polarization in groups

[working paper]

Baccara, Mariagiovanna; Yariv, Leeat

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Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract "The focus of this paper is the endogenous formation of peer groups. We study a model in which agents choose their peers prior to making decisions on multiple issues. Agents differ in how much they value the decision outcomes on one issue relative to another. While each individual can collect information on at most one issue, all information is shared within the group. Thus, the group's preference composition affects the type of information that gets collected. We characterize stable groups, groups that are optimal for all their members. When information costs are low, stable groups must be sufficiently homogeneous. Furthermore, stability requires more similarity among extremists than among moderate individuals. When information costs are substantial, a free rider problem arises, and makes extreme peers more desirable, as they are more willing to invest in information acquisition. We show that, as information costs grow, polarization appears and becomes increasingly pronounced in stable groups." (author's abstract)
Keywords group; group formation; group dynamics; polarization; peer group; information; information capture; decision; decision making; behavior
Classification Sociology of Economics; Basic Research, General Concepts and History of Economics
Free Keywords Homophily; Polarization; Group Formation; Information Collection; D82; D85
Document language English
Publication Year 2010
City Berlin
Page/Pages 55 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, Abteilung Verhalten auf Märkten, 2010-20
Licence Deposit Licence - No Redistribution, No Modifications
data provider This metadata entry was indexed by the Special Subject Collection Social Sciences, USB Cologne