social interactions (theory)

José A. Scheinkman
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

Social interactions refer to particular forms of externalities, in which the actions of a reference group affect an individual's preferences. In the presence of strategic complementarities, social interactions help reconcile the observation of large differences in outcomes in the absence of commensurate differences in fundamentals. This article surveys the theoretical literature and discusses different approaches to estimating social interactions.
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Research supported by the National Science Foundation through grant SES 0350770. I thank Alberto Bisin, Aureo de Paula, Ed Glaeser, and Yannis Ioannides for comments.
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How to cite this article

Scheinkman, José A. "social interactions (theory)." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 02 October 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_T000200> doi:10.1057/9780230226203.1558

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