Preferences, Homophily, and Social Learning

42 Pages Posted: 12 Jul 2013 Last revised: 1 Aug 2014

See all articles by Ilan Lobel

Ilan Lobel

New York University (NYU)

Evan Sadler

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 10, 2014

Abstract

We study a sequential model of Bayesian social learning in networks in which agents have heterogeneous preferences, and neighbors tend to have similar preferences — a phenomenon known as homophily. We find that the density of network connections determines the impact of preference diversity and homophily on learning. When connections are sparse, diverse preferences are harmful to learning, and homophily may lead to substantial improvements. In contrast, in a dense network, preference diversity is beneficial. Intuitively, diverse ties introduce more independence between observations while providing less information individually. Homophilous connections individually carry more useful information, but multiple observations become redundant.

Keywords: Social Networks, Learning, Homophily

Suggested Citation

Lobel, Ilan and Sadler, Evan, Preferences, Homophily, and Social Learning (June 10, 2014). Available at SSRN: https://ssrn.com/abstract=2292658 or http://dx.doi.org/10.2139/ssrn.2292658

Ilan Lobel

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Evan Sadler (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

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