By: Ariel Guerreiro
From: CFP, Univ. Porto
At: Instituto de Investigação Interdisciplinar, Anfiteatro
Nowadays, interactions between economic actors are a common place in economic models. They reflect the idea that in economic systems, like in many aspects of our everyday life, individuals self-organize in groups and societies by developing networks, joint together by some forms of interactions. In the majority of such models, interactions are typically mediated trough some indirect and anonymous mechanism, such as the price of an asset traded in the context of a market. This approach has been criticized for a long time, by economists as well as by social scientists from other disciplines, for the lack of social and psychological realism of the homo economicus. However, other types of interactions can also be considered, in particular direct interactions. Within this framework, the term social interaction has been coined to refer to the idea that the behavior of an individual depends directly on the behavior of others. This work tries to identify the impact of introducing social interactions in the outcome of discrete multiple choice problems in social networks with large number of elements in the mean field limit. Many of the results obtained for continuous choice problems need to be extended to be valid also for discrete choices problems, namely:
* Extending the existing model of discrete multiple choices with social interaction to include more general types of social interactions;
* Analyzing the impact of network effects on individual and aggregate decisions;
* Determining the role of social interactions as information exchange mechanism.
Several applications will be discussed.