[séminaire CREM FSE] “A generalized model of peer effects for binary choices: strategic complementarity and pressure to conform” Mathieu LAMBOTTE

Abstract:
Numerous individual behaviors, such as transportation mode choice, smoking, participation in protests, or engagement in physical and cultural activities, involve binary decision-making.These decisions are rarely made in complete social isolation and are thus usually influenced by the actions of one's peers. However, the majority of econometric models examining the role of peer influence have predominantly focused on continuous outcomes. In this paper, I propose an extension to econometric models of peer effects for binary variables, microfounded on a network game. This generalized model takes into account two key sources of peer effects: strategic complementarity, whereby an individual's choice is influenced by the absolute number of her peers selecting the same behavior and pressure to conform to the local social norm, which penalizes deviations from the average behavior of peers.