Social Interactions and Endogenous Association - Department of ...

Figure 3. The Effect of Increasing Crowding Out.
A. Active Associations B. (Weighted) Mean Characteristics of
Associates
A
π
H|H
A
x H
C. High-Low Difference in (Weighted)
Mean Characteristics of Associates
x
A
H
− x
A
L
∂U
∂π
A
H | H
= 0
π
H
x H
∂U
∂π
A
H | H
= 0
A Max
x
1
π
H
1
π H
High
Reg 1
High
Reg 2
1
High
Reg 3
π H
Reg 1 Reg 2 Reg 3
x L
Reg 1 Reg 2 Reg 3
Low
Reg 3
Low
Reg 2
Low
Reg 1
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