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Individual choice under social influence

Author

Listed:
  • Yusufcan Demirkan

    (New York University)

  • Boyao Li

    (New York University)

Abstract

Individual decision makers (DMs) are often influenced by their social environment when making choices. In this paper, we propose a simple choice-theoretic model to take into account the impact of social groups on individual decision making. First, we define a notion of socially acceptable alternatives by a particular social group from an arbitrary menu, which is analogous to indifference sets in consumer theory. We then proceed to study two potential scenarios in which a DM’s choices are distorted by social influence. While social groups serve as tie-breakers in the first case, in the second case they become more influential in shaping DM’s preferences in conformity to its own social preferences. Thus, the two scenarios we discuss could be seen as two extreme cases of social influence on individual choices. In each case, characterization theorems are provided to identify choice correspondences that satisfy our models. Some of our axioms are extensions of classic axioms. Thus, the characterization theorems also show what choice behaviors these axioms describe when adapted to the context of social influence on individual decision making.

Suggested Citation

  • Yusufcan Demirkan & Boyao Li, 2023. "Individual choice under social influence," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(2), pages 585-606, August.
  • Handle: RePEc:spr:joecth:v:76:y:2023:i:2:d:10.1007_s00199-022-01466-w
    DOI: 10.1007/s00199-022-01466-w
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    References listed on IDEAS

    as
    1. Abhinash Borah & Christopher Kops, 2018. "Choice via Social Influence," Working Papers 06, Ashoka University, Department of Economics.
    2. Abhinash Borah & Christopher Kops, 2018. "Choice via Social Influence," Working Papers 1010, Ashoka University, Department of Economics.
    3. Chaim Fershtman & Uzi Segal, 2018. "Preferences and Social Influence," American Economic Journal: Microeconomics, American Economic Association, vol. 10(3), pages 124-142, August.
    4. Weibin Han & Adrian Deemen, 2019. "A refinement of the uncovered set in tournaments," Theory and Decision, Springer, vol. 86(1), pages 107-121, February.
    5. Yuval Salant & Ariel Rubinstein, 2008. "(A, f): Choice with Frames -super-1," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(4), pages 1287-1296.
    6. Eliaz, Kfir & Ok, Efe A., 2006. "Indifference or indecisiveness? Choice-theoretic foundations of incomplete preferences," Games and Economic Behavior, Elsevier, vol. 56(1), pages 61-86, July.
    7. Cuhadaroglu, Tugce, 2017. "Choosing on influence," Theoretical Economics, Econometric Society, vol. 12(2), May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Bounded rationality; Social choice; Top-cycle; Preference; Framing effect; Social influence;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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