Essays on discrete choice under social interaction methodology and applications /
My dissertation focuses on interaction-based models in which a given agent’s payo¤
function directly incorporates the expected choices of other agents. Such models are
appealing in investigating group behavior evolving from individual interactions and
in explaining individual behavior under group in‡uence.
The …rst essay examines two methods of modeling binary choice with social interactions:
model assuming homogenous rational expectations and model using subjective
data on expectations. Exploiting a unique survey conducted during the 1996
U.S. presidential election that was designed to study voting behavior under social
context, we …nd that in various model speci…cations, using subjective expectations
consistently improves models’goodness-of-…t; and that expectations are not rational
as formulated by Brock and Durlauf. Speci…cally, members’characteristics are individually
important in forming expectations. We also include correlated e¤ect into the
rational expectation model and demonstrate that its identi…cation is made possible
by the nonlinearity introduced through rational expectation term. This extension
provides a remedy to the selection issues that often arise in social interaction models.
My second essay empirically investigates how political discussion among voters
a¤ects their voting choices, particularly how a voter’s perception of his or her discussants’political
sophistication in‡uences the extent to which his or her choice conforms
to those of his or her discussants. I …nd that positive evaluation of discussants’political
sophistication reinforces the degree of conformity.
The third essay develops an interaction-based binary choice model with heterogeneous
rational expectations and applies it to the study of adolescents’smoking behavior
under peer in‡uence. We relax the homogeneous rational expectation assumptions
in previous work and examine models in which members in a group hold di¤erent expectations
toward the average choice of others (heterogeneous rational expectation).
We propose an allocation mechanism that facilitates the evaluation of equilibriums
and we also show that, under mild restrictions, unique rational expectations equilibrium
exists in such model. In application, we investigate both endogenous and
exogenous peer e¤ects in determining adolescents’smoking behavior and …nd that,
in addition to own characteristics, peer e¤ects do have signi…cant impact.
School:The Ohio State University
School Location:USA - Ohio
Source Type:Master's Thesis
Keywords:social interaction decision making rational expectations economic theory
Date of Publication: