Dispersed Behavior and Perceptions in Assortative Societies

Authors

Mira Frick
Ryota Iijima
Yuhta Ishii

Document Type

Discussion Paper

Publication Date

4-1-2018

CFDP Number

2128R

CFDP Revision Date

March 1, 2019

CFDP Pages

46

Journal of Economic Literature (JEL) Code(s)

C70, D83, D90

Abstract

We take an equilibrium-based approach to study the interplay between behavior and misperceptions in coordination games with assortative interactions. Our focus is assortativity neglect, where agents fail to take into account the extent of assortativity in society. We show, first, that assortativity neglect amplifies action dispersion, both in fixed societies and by exacerbating the effect of social changes. Second, unlike other misperceptions, assortativity neglect is a misperception that agents can rationalize in any true environment. Finally, assortativity neglect provides a lens through which to understand how empirically documented misperceptions about distributions of population characteristics (e.g., income inequality) vary across societies.

Comments

Supplement Materials, 22 pp

Recommended Citation

Frick, Mira; Iijima, Ryota; and Ishii, Yuhta, "Dispersed Behavior and Perceptions in Assortative Societies" (2018). Cowles Foundation Discussion Papers. 145.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/145