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Tuesday, September 4, 2018 at 11:40am to 1:10pm
Uris Hall, 498
Vincent Boucher - Université Laval
Abstract: I look at the equilibrium effects of homophily in networks formation games with positive network externalities. I show that very weak preferences for network effects (such as preferences for being part of a clique) may result in very high levels of homophily at equilibrium. I present an empirical procedure that allows to evaluate the role of network effects on the observed level of homophily in the data. I apply my method to the formation of friendship network in the USA. I show that network effects are small, and have a negligible contribution to observed racial homophily in friendship networks.