Living in Two Neighborhoods : Social Interactions in the Lab

Field evidence suggests that people belonging to the same group often behave similarly, i.e.,behaviour exhibits social interaction effects. We conduct an experiment that avoids theidentification problem present in the field. Our novel design feature is that each subjectsimultaneously is a member of two randomly assigned and identical groups where onlymembers ( neighbours ) are different. In both groups subjects contribute to a public good. Wespeak of social interactions if the same subject at the same time makes group-specificcontributions that depend on their respective neighbours contribution. We find that a majorityof subjects exhibits social interaction effects