Social Interactions and Economic Behavior

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: This paper is a critical introduction to the new wave of economic literature on the effect of social interactions on individual behavior and aggregate economic outcomes. I refer to this research program, also known as new social economics, as the socioeconomic analysis of behavior, to distinguish it from the more popular economic analysis of social behavior. I discuss the main features of so-called interactions-based models, and I show how they help us to understand substantive economic phenomena. In order to restrict the focus, I choose five possible applications: matching in the labor market, welfare participation, poverty traps and inequality, investor behavior, and consumer behavior. Then I dwell upon two key undecided questions: (i) why economic behavior is affected by social interactions, and (ii) how the social context is shaped by rational individuals. Finally, I briefly discuss the main empirical routes so far used.

Keywords: new social economics; social interactions; neighborhood effects; social networks; social norms; social multiplier (search for similar items in EconPapers)
JEL-codes: D10 D85 Z13 Z19 (search for similar items in EconPapers)
Date: 2004-11
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-hpe, nep-mic, nep-net, nep-pke and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:441

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