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Full-Text Articles in Economics
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Cowles Foundation Discussion Papers
We take an equilibrium-based approach to study the interplay between behavior and misperceptions in coordination games with assortative interactions. Our focus is assortativity neglect, where agents fail to take into account the extent of assortativity in society. We show, first, that assortativity neglect amplifies action dispersion, both in fixed societies and by exacerbating the effect of social changes. Second, unlike other misperceptions, assortativity neglect is a misperception that agents can rationalize in any true environment. Finally, assortativity neglect provides a lens through which to understand how empirically documented misperceptions about distributions of population characteristics (e.g., income inequality) vary across societies.
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Cowles Foundation Discussion Papers
We formulate a model of social interactions and misinferences by agents who neglect assortativity in their society, mistakenly believing that they interact with a representative sample of the population. A key component of our approach is the interplay between this bias and agents’ strategic incentives. We highlight a mechanism through which assortativity neglect, combined with strategic complementarities in agents’ behavior, drives up action dispersion in society (e.g., socioeconomic disparities in education investment). We also suggest that the combination of assortativity neglect and strategic incentives may be relevant in understanding empirically documented misperceptions of income inequality and political attitude polarization.
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Cowles Foundation Discussion Papers
Motivated by the fact that people’s perceptions of their societies are routinely incorrect, we study the possibility and implications of misperception in social interactions. We focus on coordination games with assortative interactions, where agents with higher types (e.g., wealth, political attitudes) are more likely than lower types to interact with other high types. Assortativity creates scope for misperception, because what agents observe in their local interactions need not be representative of society as a whole. To model this, we define a tractable solution concept, “local perception equilibrium” (LPE), that describes possible behavior and perceptions when agents’ beliefs are derived only …
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Dispersed Behavior And Perceptions In Assortative Societies, Mira Frick, Ryota Iijima, Yuhta Ishii
Cowles Foundation Discussion Papers
We formulate a model of social interactions and misinferences by agents who neglect assortativity in their society, mistakenly believing that they interact with a representative sample of the population. A key component of our approach is the interplay between this bias and agents’ strategic incentives. We highlight a mechanism through which assortativity neglect, combined with strategic complementarities in agents’ behavior, drives up action dispersion in society (e.g., socioeconomic disparities in education investment). We also show how the combination of assortativity neglect and strategic incentives may help to explain empirically documented misperceptions of income inequality and political attitude polarization.