DP10321 Which club should I attend, Dad?: Targeted socialization and production

Author(s): Facundo Albornoz-Crespo, Antonio Cabrales, Esther Hauk
Publication Date: December 2014
Keyword(s): cultural identity, immigrant sorting, network formation, parental involvement, peer effects
JEL(s): I20, I28, J15, J24, J61
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10321

We study a model that integrates productive and socialization efforts with network choice and parental investments. We characterize the unique symmetric equilibrium of this game. We first show that individuals underinvest in productive and social effort, but that solving only the investment problem can exacerbate the misallocations due to network choice, to the point that it may generate an even lower social welfare if one of the networks is sufficiently disadvantaged. We also study the interaction of parental investment with network choice. We relate these equilibrium results with characteristics that we find in the data on economic co-authorship and field transmission between advisors and advisees.