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dc.contributor.authorBaccara, Mariagiovannaen_US
dc.contributor.authorYariv, Leeaten_US
dc.date.accessioned2012-01-10en_US
dc.date.accessioned2012-01-11T11:24:01Z-
dc.date.available2012-01-11T11:24:01Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/54574-
dc.description.abstractThe focus of this paper is the endogenous formation of peer groups. We study a model in which agents choose their peers prior to making decisions on multiple issues. Agents differ in how much they value the decision outcomes on one issue relative to another. While each individual can collect information on at most one issue, all information is shared within the group. Thus, the group's preference composition affects the type of information that gets collected. We characterize stable groups, groups that are optimal for all their members. When information costs are low, stable groups must be sufficiently homogeneous. Furthermore, stability requires more similarity among extremists than among moderate individuals. When information costs are substantial, a free rider problem arises, and makes extreme peers more desirable, as they are more willing to invest in information acquisition. We show that, as information costs grow, polarization appears and becomes increasingly pronounced in stable groups.en_US
dc.language.isoengen_US
dc.publisherWZB Berlinen_US
dc.relation.ispartofseriesDiscussion papers // Wissenschaftszentrum Berlin für Sozialforschung, Schwerpunkt Märkte und Politik: Abteilung Verhalten auf Märkten SP II 2010-20en_US
dc.subject.jelD82en_US
dc.subject.jelD85en_US
dc.subject.ddc330en_US
dc.subject.keywordHomophilyen_US
dc.subject.keywordPolarizationen_US
dc.subject.keywordGroup Formationen_US
dc.subject.keywordInformation Collectionen_US
dc.titleSimilarity and polarization in groupsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn682526746en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
dc.identifier.repecRePEc:zbw:wzbmbh:SPII201020-
Appears in Collections:Publikationen von Forscherinnen und Forschern des WZB
Discussion Papers, Abteilung Verhalten auf Märkten, WZB

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