How (Not) to Choose Peers in Studying Groups

36 Pages Posted: 7 Jun 2006

See all articles by Thomas Gall

Thomas Gall

University of Southampton - Division of Economics

Roland Amann

University of Konstanz

Date Written: May 2006

Abstract

This paper analyzes social group formation when agents are subject to peer effects within groups increasing human capital and instantaneous utility. When agents are heterogeneous on two dimensions, ability and social skills, and monetary payments are not feasible the model predicts segregation at the top and at the bottom of the attribute space and bunching for heterogeneous intermediate types. Groups may be heterogeneous in taste types and more heterogeneous types are more likely to participate. The equilibrium allocation does not induce cost-efficient human capital accumulation. Introducing ability tracking may produce beneficial results despite decreasing differences in human capital production.

Keywords: Education, Peer-effects, Matching, Group Formation

JEL Classification: I21, C78, D51

Suggested Citation

Gall, Thomas and Amann, Roland, How (Not) to Choose Peers in Studying Groups (May 2006). FEEM Working Paper No. 79.2006, Available at SSRN: https://ssrn.com/abstract=904315 or http://dx.doi.org/10.2139/ssrn.904315

Thomas Gall (Contact Author)

University of Southampton - Division of Economics ( email )

Southampton, SO17 1BJ
United Kingdom

Roland Amann

University of Konstanz ( email )

Fach D-144
Universitätsstraße 10
Konstanz, D-78457
Germany

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