Quiz Questions

Sorting and Peer Effects - we hang out with people who are similar to us and we begin to act like them

Schelling - Segregation model - Thomas Schelling (UMD)

- 2 types of segregation were his original interest - Income and Race
- Agent based model
- should I stay here or move  --> looks like a checkerboard.  They look at surrounding neighbors
- Threshold - I have 7 neighbors how many need to be like me.
- Computer Software - Netlogo
- If we require too many people near us to be like us, we will eventually not be able to live there at all, as we cannot get enough people near us to continue to stay all the time
-  Tipping percent - if 1 leaves, then others will follow
-  Genesis Tip - someone moves in causes someone else to move out

Measure of Dis-similarity
How do we measure dis-similarity?
Index of Dis-similarity - create dots w/ colors (Rich, poor, 1/2 poor/1/2 Rich)
- relatively greater one or the other leads to a higher Index (uses absolute value markers so index is always positive, it just doesn't specify which way it is dis-similar.
- multiplying by the number of people and an index, then we get to the index

Perfectly mixed value give an index of 0
Perfectly segregated gives an index of 2
Don't forget to divide by to get it normalized

Granovetter - Social Behavior

Peer Effects
Contagion - hard to predict the outcome

Model:
    N people
    T persons Threshold (0 means you join without others, 50 means it has to be 50 people before you join)

Lower Thresholds - leads to more collective actions
More variation - leads to more collective actions

Standing Ovation (Based on Granovetter) - Created by Page and  -

Standing Ovation is a Peer Effect

Information - others who seem to know more, we have to recognize their expertise

Threshold: T

Quality: Q  (how good is the show, to you)

Error: E (some signal) (can also be Diversity)

Signal S = Q + E

X = % of people who need to stand before I will

If S >T, Stand

Higher quality of the show ==> more likely to stand

Lower T, more likely to stand

Lower X, more ovations

What causes X to be big? people who are secure in their position

What causes X to be small? people who are unsure about their positions

E if this is Diversity, then E allows for a positive or negative variation

Large Diversity is likely to create a standing ovation

What causes E to be big?

-  If multidimensional, create larger variancevariance

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Aggregating Preferences

-  Preference Ordering - prioritizing within a category (fruit, cars, etc)

-  Transitive preferences - rational prioritization

-  Rational preferences follow x(x-1)(x-2) etc possible rational routes

Collective Preference (what is our family choice)

Condorcet Paradox - each person is rational, but the collective is not rational

Identification - Are people similar so they start to look similar?

Agent Based Models have:
-  Individuals
-  Behaviors
-  Outcomes