CeDEx workshop - Edward Cartwright (University of Kent)

Salient endogenous social interactions effects: An experimental investigation

Abstract

We experimentally disentangle two potential sources for endogenous social interactions effects. By comparing groups where the group norm is observable with those where it is not we can measure the size of any endogenous observation effect. By comparing connected with disconnected groups we can measure the size of any endogenous strategic interaction effect. Results are provided for both the stag hunt coordination game and the prisoners dilemma. We find strong evidence of an endogenous observation effect in the stag hunt game but not prisoners dilemma. We find no evidence of an endogenous strategic interaction effect in either game. While our results point towards a conformity effect we argue that information on the group norm primarily acts as a coordinating device. Conventional methods for estimating endogenous social interactions effects are also estimated with our data and shown to give biased results