Working Papers:

ABSTRACT: When designing interventions aiming to foster peer effects in schools, knowledge on the endogenous sorting of individuals into groups is key. We propose a theoretical model where agents form groups endogenously, and their outcomes are affected accordingly. Using a popular payoff structure, we show that equilibrium outcomes have a direct correspondence with the linear-in-means model, used to study empirically peer effects and we characterize the set of stable networks. The model can be fitted with real data, providing the tools to i) infer the network in case we do not have this information, ii) match theoretical outcomes with real ones, to infer the motives behind network formation and iii) simulate effects of interventions that manipulate the composition of classrooms. Simulating data we show that the model can consistently reproduce the results of Carrell et al. (2013).

  • Polarization when people choose their peers (latest 2018, first 2016) – joint with Paolo Pin – SSRN link – submitted

ABSTRACT: Processes of polarization have been documented in several applications. Yet most existing theories focus on how herding behavior and convergence of opinions tend to occur in different contexts. In this paper, we develop a model where agents correct their heterogeneous initial opinion by averaging the opinions of their neighbors. Our key contribution is to let the network arise endogenously. To do so, we micro–found how individuals optimally choose reference groups and we characterize a dynamic process where the network evolves along with individual opinions. Results show that there are always conditions on the strength of social influence preventing the network from being connected. This causes polarization in the long run. However, polarization can also arise during the transition to a consensus. We show how each of these cases is tied to a key network statistic, the initial diameter.

Work in progress: