[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03411765.html
   My bibliography  Save this paper

Showing or telling? Local interaction and organization of behavior

Author

Listed:
  • Zakaria Babutsidze

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, SKEMA Business School - SKEMA Business School)

  • Robert Cowan

    (Maastricht University [Maastricht])

Abstract
We present a choice model based on agent interaction. Interaction is modeled as face-to-face communication that takes place on a regular periodic lattice with decision-makers exchanging information only with immediate neighbors. We investigate the long-run (equilibrium) behavior of the resulting system and show that for a large range of initial conditions clustering in economic behavior emerges and persists indefinitely. Unlike many models in the literature, our model allows for the analysis of multi-option environments. Therefore, we add to existing results by deriving the equilibrium distribution of option popularity and thus, implicitly, of market shares. Additionally, the model sheds new light on the emergence of the novel behavior in societies.

Suggested Citation

  • Zakaria Babutsidze & Robert Cowan, 2014. "Showing or telling? Local interaction and organization of behavior," Post-Print hal-03411765, HAL.
    • Handle: RePEc:hal:journl:hal-03411765
    DOI: 10.1007/s11403-013-0117-x
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brock, William A. & Durlauf, Steven N., 2001. "Interactions-based models," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 54, pages 3297-3380, Elsevier.
    2. Abel, Andrew B, 1990. "Asset Prices under Habit Formation and Catching Up with the Joneses," American Economic Review, American Economic Association, vol. 80(2), pages 38-42, May.
    3. Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen J. Turnovsky, 2004. "Habit Formation, Catching Up with the Joneses, and Economic Growth," Journal of Economic Growth, Springer, vol. 9(1), pages 47-80, March.
    4. Pradeep K. Chintagunta, 1998. "Inertia and Variety Seeking in a Model of Brand-Purchase Timing," Marketing Science, INFORMS, vol. 17(3), pages 253-270.
    5. Danny Quah, 2002. "Spatial Agglomeration Dynamics," American Economic Review, American Economic Association, vol. 92(2), pages 247-252, May.
    6. Bala, Venkatesh & Sorger, Gerhard, 2001. "A Spatial-Temporal Model of Human Capital Accumulation," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 153-179, January.
    7. Glenn Ellison & Drew Fudenberg, 1995. "Word-of-Mouth Communication and Social Learning," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 93-125.
    8. Yannis Ioannides, 2006. "Topologies of social interactions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(3), pages 559-584, August.
    9. Ikeda, Kiyohiro & Akamatsu, Takashi & Kono, Tatsuhito, 2012. "Spatial period-doubling agglomeration of a core–periphery model with a system of cities," Journal of Economic Dynamics and Control, Elsevier, vol. 36(5), pages 754-778.
    10. William A. Brock & Steven N. Durlauf, 2001. "Discrete Choice with Social Interactions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 235-260.
    11. Abhijit V. Banerjee, 1993. "The Economics of Rumours," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(2), pages 309-327.
    12. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-643, August.
    13. Ahn, Illtae & Suominen, Matti, 2001. "Word-of-Mouth Communication and Community Enforcement," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 399-415, May.
    14. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    15. Banerjee, Abhijit & Fudenberg, Drew, 2004. "Word-of-mouth learning," Games and Economic Behavior, Elsevier, vol. 46(1), pages 1-22, January.
    16. William A. Brock & Steven N. Durlauf, 2002. "A Multinomial-Choice Model of Neighborhood Effects," American Economic Review, American Economic Association, vol. 92(2), pages 298-303, May.
    17. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-543, June.
    18. Morten Ravn & Stephanie Schmitt-Grohé & Martín Uribe, 2006. "Deep Habits," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(1), pages 195-218.
    19. Quah, Danny, 2000. "Internet cluster emergence," LSE Research Online Documents on Economics 2220, London School of Economics and Political Science, LSE Library.
    20. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 797-817.
    21. Alfarano, Simone & Milakovic, Mishael, 2009. "Network structure and N-dependence in agent-based herding models," Journal of Economic Dynamics and Control, Elsevier, vol. 33(1), pages 78-92, January.
    22. Pope, Rulon & Green, Richard & Eales, Jim, 1980. "Testing for Homogeneity and Habit in a Flexible Demand Specification U.S. Meat Consumption," 1980 Annual Meeting, July 27-30, Urbana-Champaign, Illinois 278408, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    23. Lones Smith & Peter Sorensen, 2000. "Pathological Outcomes of Observational Learning," Econometrica, Econometric Society, vol. 68(2), pages 371-398, March.
    24. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
    25. Hirshleifer, David, 1993. "The Blind Leading the Blind: Social Influence, Fads, and Informational Cascades," University of California at Los Angeles, Anderson Graduate School of Management qt8wz980p5, Anderson Graduate School of Management, UCLA.
    26. Chincarini, Ludwig & Asherie, Neer, 2008. "An analytical model for the formation of economic clusters," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 252-270, May.
    27. Quah, Danny, 2000. "Internet cluster emergence," European Economic Review, Elsevier, vol. 44(4-6), pages 1032-1044, May.
    28. Quah, Danny, 2002. "Spatial agglomeration dynamics," LSE Research Online Documents on Economics 2042, London School of Economics and Political Science, LSE Library.
    29. Danny Quah, 2000. "Internet Cluster Emergence," CEP Discussion Papers dp0441, Centre for Economic Performance, LSE.
    30. Rulon Pope & Richard Green & Jim Eales, 1980. "Testing for Homogeneity and Habit Formation in a Flexible Demand Specification of U.S. Meat Consumption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(4), pages 778-784.
    31. Carlos Arnade & Munisamy Gopinath & Daniel Pick, 2008. "Brand Inertia in U.S. Household Cheese Consumption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 813-826.
    32. Danny Quah, 2002. "Spatial Agglomeration Dynamics," CEP Discussion Papers dp0521, Centre for Economic Performance, LSE.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zakaria Babutsidze, 2016. "Innovation, competition and firm size distribution on fragmented markets," Journal of Evolutionary Economics, Springer, vol. 26(1), pages 143-169, March.
    2. Babutsidze, Zakaria & Chai, Andreas, 2018. "Look at me Saving the Planet! The Imitation of Visible Green Behavior and its Impact on the Climate Value-Action Gap," Ecological Economics, Elsevier, vol. 146(C), pages 290-303.
    3. Chiara Franco & Claudia Ghisetti, 2022. "What shapes the “value-action” gap? The role of time perception reconsidered," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(3), pages 1023-1053, October.
    4. Babutsidze, Zakaria, 2018. "The rise of electronic social networks and implications for advertisers," Technological Forecasting and Social Change, Elsevier, vol. 137(C), pages 27-39.
    5. Amel Attour & Marco Baudino & Jackie Krafft & Nathalie Lazaric, 2020. "Determinants of smart energy tracking application use at the city level: Evidence from France," Post-Print hal-02942483, HAL.
    6. Jianhua Zhang & Xiaolong Liu & Dimitris Ballas, 2023. "Spatial and relational peer effects on environmental behavioral imitation," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(4), pages 575-599, October.
    7. Nathalie Lazaric & Fabrice Guel & Jean Belin & Vanessa Oltra & Sébastien Lavaud & Ali Douai, 2020. "Determinants of sustainable consumption in France: the importance of social influence and environmental values," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1337-1366, November.
    8. Hüseyin İkizler, 2019. "Contagion of network products in small-world networks," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(4), pages 789-809, December.
    9. Attour, Amel & Baudino, Marco & Krafft, Jackie & Lazaric, Nathalie, 2020. "Determinants of energy tracking application use at the city level: Evidence from France," Energy Policy, Elsevier, vol. 147(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zakaria Babutsidze & Robin Cowan, 2011. "Word-of-mouth interaction and the organization of behaviour," Documents de Travail de l'OFCE 2011-11, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Hirshleifer, David & Teoh, Siew Hong, 2008. "Thought and Behavior Contagion in Capital Markets," MPRA Paper 9164, University Library of Munich, Germany.
    3. Jonas Hedlund & Carlos Oyarzun, 2018. "Imitation in heterogeneous populations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(4), pages 937-973, June.
    4. Davide Crapis & Bar Ifrach & Costis Maglaras & Marco Scarsini, 2017. "Monopoly Pricing in the Presence of Social Learning," Management Science, INFORMS, vol. 63(11), pages 3586-3608, November.
    5. Jadbabaie, Ali & Molavi, Pooya & Sandroni, Alvaro & Tahbaz-Salehi, Alireza, 2012. "Non-Bayesian social learning," Games and Economic Behavior, Elsevier, vol. 76(1), pages 210-225.
    6. Banerjee, Abhijit & Fudenberg, Drew, 2004. "Word-of-mouth learning," Games and Economic Behavior, Elsevier, vol. 46(1), pages 1-22, January.
    7. Daron Acemoglu & Asuman Ozdaglar, 2011. "Opinion Dynamics and Learning in Social Networks," Dynamic Games and Applications, Springer, vol. 1(1), pages 3-49, March.
    8. Daron Acemoglu & Munther A. Dahleh & Ilan Lobel & Asuman Ozdaglar, 2011. "Bayesian Learning in Social Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(4), pages 1201-1236.
    9. Larson, Nathan, 2015. "Inertia in social learning from a summary statistic," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 596-626.
    10. Orlando Gomes, 2004. "Location Dynamics and Knowledge Agglomeration," Urban/Regional 0409012, University Library of Munich, Germany.
    11. Camargo, Braz, 2014. "Learning in society," Games and Economic Behavior, Elsevier, vol. 87(C), pages 381-396.
    12. Delia Coculescu & Médéric Motte & Huyên Pham, 2024. "Opinion dynamics in communities with major influencers and implicit social influence via mean-field approximation," Mathematics and Financial Economics, Springer, volume 18, number 7, December.
    13. Bou{g}açhan Çelen & Shachar Kariv & Andrew Schotter, 2010. "An Experimental Test of Advice and Social Learning," Management Science, INFORMS, vol. 56(10), pages 1687-1701, October.
    14. Monzón, Ignacio & Rapp, Michael, 2014. "Observational learning with position uncertainty," Journal of Economic Theory, Elsevier, vol. 154(C), pages 375-402.
    15. David Hirshleifer & Siew Hong Teoh, 2003. "Herd Behaviour and Cascading in Capital Markets: a Review and Synthesis," European Financial Management, European Financial Management Association, vol. 9(1), pages 25-66, March.
    16. Wang, Guocheng & Wang, Yanyi, 2018. "Herding, social network and volatility," Economic Modelling, Elsevier, vol. 68(C), pages 74-81.
    17. H. Peyton Young, 2009. "Innovation Diffusion in Heterogeneous Populations: Contagion, Social Influence, and Social Learning," American Economic Review, American Economic Association, vol. 99(5), pages 1899-1924, December.
    18. Buechel, Berno & Hellmann, Tim & Klößner, Stefan, 2015. "Opinion dynamics and wisdom under conformity," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 240-257.
    19. Song, Yangbo, 2016. "Social learning with endogenous observation," Journal of Economic Theory, Elsevier, vol. 166(C), pages 324-333.
    20. Sobel, Joel, 2000. "Economists' Models of Learning," Journal of Economic Theory, Elsevier, vol. 94(2), pages 241-261, October.

    More about this item

    Keywords

    Interaction; Inertia; Clustering; Choice;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03411765. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.