“Economic Analysis of Social Interactions,” Charles Manski, 2000

JEP review of economic study of social interactions, whether they be market-based (agents affect the price of goods, and hence constrain the actions of other agents), expectations-based (my choice of what to do depends on what you will do), or preference-based (your preferences themselves directly affect my preferences; for instance, we can discuss subjective probabilities of an event occurring). Notes that mathematization of economics allows for less conceptual confusion than sociology (for instance, economists are clear on the mathematical meaning of equilibrium, but sociologists use words like social capital in many different ways). Discusses econometric methods for solving simultaneity problem (identifying supply and demand together) and reflection problem (does group affect individual behavior, or does individual change affect the group behavior – like a reflection in the mirror which moves instantaneously, it is difficult to elicit which is the cause and which is not).


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