Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/54574 
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dc.contributor.authorBaccara, Mariagiovannaen
dc.contributor.authorYariv, Leeaten
dc.date.accessioned2012-01-10-
dc.date.accessioned2012-01-11T11:24:01Z-
dc.date.available2012-01-11T11:24:01Z-
dc.date.issued2010-
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
dc.language.isoengen
dc.publisher|aWissenschaftszentrum Berlin für Sozialforschung (WZB) |cBerlinen
dc.relation.ispartofseries|aWZB Discussion Paper |xSP II 2010-20en
dc.subject.jelD82en
dc.subject.jelD85en
dc.subject.ddc330en
dc.subject.keywordHomophilyen
dc.subject.keywordPolarizationen
dc.subject.keywordGroup Formationen
dc.subject.keywordInformation Collectionen
dc.titleSimilarity and polarization in groups-
dc.typeWorking Paperen
dc.identifier.ppn682526746en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:wzbmbh:SPII201020en

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