skip to content

Faculty of Economics

Journal Cover

Goyal, S., Hernández, P., Martínez-Cánovasz, G., Moisan, F., Muñoz-Herrera, M. and Sánchez, A.

Integration and Diversity

Experimental Economics, forthcoming

(2020)

Abstract: We study a setting where individuals prefer to coordinate with others but they differ on their preferred action. Our interest is understanding the role of linking in shaping behavior. So we consider the situation in which interactions are exogenous and a situation where individuals choose links that determine the interactions. Theory is permissive in both settings: conformism (on either of the actions) and diversity (with different groups choosing their preferred actions) are both sustainable in equilibrium. Our experiments reveal that, in an exogenous complete network, subjects choose to conform to the majority's preferred action. By contrast, when linking is free and endogenous, subjects form dense networks (biased in favour of linking within same preferences type) but choose diverse actions. The convergence to diverse actions is faster under endogenous linking as compared to the convergence to conformity on the majority's preferred action under the exogenous complete network. Thus our experiments suggest that individuals use links to resolve the coordination problem.

Keywords: Networks, equilibrium selection, social coordination, experiments

JEL Codes: D85, D03, C72, C92

Author links: Sanjeev Goyal  


Cambridge Working Paper in Economics Version of Paper: Integration and Diversity, Goyal, S., Hernández, P., Martínez-Cánovasz, G., Moisan, F., Muñoz-Herrera, M. and Sánchez, A., (2017)

Papers and Publications



Recent Publications


Jochmans, K. and Weidner, M. Fixed-Effect Regressions on Network Data Econometrica [2019]

Faraglia, E., Marcet, A., Oikonomou, R. and Scott, A. Government Debt management: the Short and the Long of it Review of Economic Studies [2019]

Bergin, P. R. and Corsetti, G. Beyond Competitive Devaluations: The Monetary Dimensions of Comparative Advantage American Economic Journal: Macroeconomics [2020]

Biroli, P., Boneva, T., Raja, A. and Rauh, C. Parental Beliefs About Returns to Child Health Investments Journal of Econometrics [2020]