4,264 research outputs found

    Interactive Property Valuations

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    This paper develops a model of housing decisions which allows for social interactions within residential neighborhoods to impact homeowners' valuation of their own properties. The model is used to structure an empirical investigation with data from the American Housing Survey for 1985 and 1989. It explores in great detail a relatively neglected feature of the data, namely the availability of data of neighborhood clusters for standard metropolitan areas in the United States. This feature of the data allows us to model empirically the effects of social interactions at the immediate residential neighborhood level, with neighborhoods consisting of a dwelling unit and its ten nearest neighbors. Most previous work on neighborhoods has used contextual information associated with the census tract where a unit of observation belongs. It identifies the effect of endogenous social interactions and find that the impact of social interactions is much more important then the dynamic (autoregressive) structure of the model when both variables are present (but both are significant). The findings provide empirical support for the notion, common in the real estate world, of the importance of neighborhood characteristics in property valuations.neighborhood effects, housing, social interactions, property valuations

    Topologies of Social Interactions

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    The paper adapts to richer social structures the Brock-Durlauf model of interactive discrete choice, where individuals’ decisions are influenced by the decisions of others. Social structure is modelled by a description of who interacts with whom, by means of a graph, with individuals as vertices and interaction between individuals as edges. The paper extends the mean field case to such alternative stylized interaction topologies as when individuals are connected through a common intermediary, the graph topology of interactions is a cycle or an one-dimensional lattice. Some results are qualitatively similar to the mean field case, but a richer class of anisotropic equilibria is also explored, for the case of the cycle and one-dimensional lattice. Social equilibria are also explored under the condition that individuals’ behavior is affected by the actual behavior of their neighbors and links are made with the econometric theory of systems of simultaneous equations modelling discrete decisions. The paper studies the role of interaction topology for the dynamics of adjustment towards isotropic equilibria. It compares circular interaction along a one-dimensional lattice with and without closure and shows that both lead to endogenous and generally transient spatial oscillations. However, closure of the social structure is responsible for relative persistence.interactions, dynamics, spatial oscillations, interactive discrete choice, neighborhood effects, Ising model, random fields

    Empirics of Social Interactions

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    Empirical studies of social interactions address a multitude of de¯nitional, econo- metric and measurement issues associated with role of interpersonal and social group in°uences in economic decisions. Applications range from studies of crime patterns, neighborhood in°uences on upbringing and conformist behavior, mutual in°uences among classmates and keeping up with roommates in colleges regarding academic and social activities, to herding and to learning about social services. The entry reviews several instances of successful identi¯cation of e®ects emanating from others' behavior as distinct from characteristics of others. Data sets with increasingly rich contextual information will allow estimation of complex models of economic decisions.Social interactions, peer e®ects, contextual e®ects, neighborhood choice, neighbors, neighborhoods, neighborhood e®ects, laboratory experiments, ¯eld experi- ments, self selection, social networks

    Full Solution of an Endogenous Sorting Model with Contextual and Income Effects

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    The paper solves themselves into neighborhoods because they value average schooling among adults in the neighborhood. The paper extends results by Nesheim (2002) but with the addition of income effects on neighborhood choice. Individuals value housing, non-housing consumption, and expected schooling of their children. The latter depends on parental schooling, on a child's ability, and on average schooling in the neighborhood. Neighborhood choice trades off non-housing consumption with children's expected schooling. Individuals choose neighborhoods recongnizing that their neighbors' characteristics are correlated with their own. The equilibrium housing price is associated with endogenous sorting and also allows computation of a neighborhood distributions of income, schooling and other variables of interest.

    Complexity and Organizational Architecture

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    This paper revisits the literature on modelling organizations by means of networks of agents. Individual agents are engaged in screening projects, and architectural features of organizations, that is how each agent’s decision combines with those of others, a®ect the organization’s screening performance. It emphasizes how an organization of several agents may be improve upon individual performance by a suitable arrangement of the flow of decisions. The paper is motivated, in part, by a theorem due to Von Neumann, Moore and Shannon on how to build reliable networks using unreliable components and extends previous contributions by Sah and Stiglitz by recasting their original model in standard firm-theoretic terms and endogenizing its features. For an organization’s screening performance to improve over those of an individual’s, it must be sigmoid in individual performance, as measured by the probability that a good (bad) project be accepted (rejected). This is indeed the case for organizations with mixed Sah-stiglitz architectures, such as hierarchies made up of components that are polyarchies, and polyarchies made up of components that are hierarchies, give rise to such functions. This property is in turn critical for determining of the optimal number of levels of a hierarchy, and for endogenizing individual screening performance. The models are extended to allow for individuals’ own screening to be influenced from the opinions of superiors and subordinates. The paper examines the implications of such interactions for the limits to organizational performance.government to influence the real value of assets using fiscal and monetary policy.organizations, architecture, complexity, composition

    Intercity Trade and Convergent versus Divergent Urban Growth

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    The paper studies intercity trade and growth in an overlapping-generations economy where tradeable goods are produced using a composite of capital, raw labor and intermediates, and are combined in each city to produce a composite. The composite is used for consumption and investment. Tax-financed investment that affects commuting costs endogenizes city size. A combination of weak (strong) diminishing returns and strong (weak) market size effects can lead to increasing (decreasing) returns to scale. Autarkic urban growth may be parallel or divergent. Capital growth in the integrated economy has the same dynamic properties as its counterpart for an economy with autarkic cities but leads to national constant returns to scale.

    Searching for the Best Neighborhood: Mobility and Social Interactions

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    The paper seeks to contribute to the social interactions literature by exploiting data on individual's self- selection into neighborhoods. We study a model in which households search for the best location in the presence of neighborhood effects in the formation of children's human capital and in the process of cultural transmission. We use micro data from the PSID which we have merged, using geocodes, with contextual information at the leves of census tracts and of counties from the 2000 US Census. We control for numerous individual characteristics and neighborhood attributes and find, consistently with neighborhood effects models, that households with children, but not those without, are more likely to move out of neighborhoods whose attributes are not favorable to the productin of human capital and the transmission of parents' cultural traits, and to move into neighborhoods which instead exhibit desireable such attributes.

    Zipfs Law for Cities: An Empirical Examination

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    We use data for metro areas in the United States, from the US Census for 1900 û 1990, to test the validity of Zipf's Law for cities. Previous investigations are restricted to regressions of log size against log rank. In contrast, we use a nonparametric procedure to calculate local Zipf exponents from the mean and variance of city growth rates. This also allows us to test for the validity of Gibrat's Law for city growth processes. Despite variation in growth rates as a function of city size, Gibrat's Law does hold. In addition the local Zipf exponents are broadly consistent with Zipf's Law. Deviations from Zipf's Law are easily explained by deviations from Gibrat's Law.Urban growth, Zipfs Law, Gibrats Law, estimation of Brownian motion

    Income Mixing and Housing in U.S. Cities: Evidence from Neighborhood Clusters of the American Housing Survey

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    The paper describes within-neighborhood economic segregation in U.S. metropolitan areas in 1985 and 1993. It uses the neighborhood clusters of the American Housing Survey, standardized by metropolitan area income and household size, to explore income distribution within neighborhoods at a scale much smaller than the census tract (a representative sample of households or ‘kernels’ and their ten closest neighbors). Joint and conditional distributions portray neighbors’ characteristics conditional on the kernel’s housing tenure, race and income. The paper documents both significant income mixing in the majority of US urban micro neighborhoods and the extent of income mixing within neighborhoods of concentrated poverty.
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