Field evidence suggests that agents belonging to the same group tend to behave similarly, i.e., behavior exhibits social interaction effects. Testing for such effects raises severe identification problems. We conduct an experiment that avoids these problems. The main design feature is that each...

This paper studies the relevance of social interactions among the unemployed. Identification is based on a salient and selective extension of the potential duration of unemployment benefits. If social interactions are important, ths policy change affects entitled individuals not only directly,...

In many business transactions, in labor-management relations, in international conflicts, and welfare state reforms claims acquired in the past seem to create strong entitlements that shape current negotiations. Despite their importance, the role of entitlements in negotiations has not received...

There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in-means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We develop a new...

Using a model of O-ring production function, the paper demonstrates how certain communities can get caught in a low-literacy trap in which each individual finds it not worthwhile investing in higher skills because others are not high-skilled. The model sheds light on educational policy. It is...

We investigate whether and how social ties affect performance in teams by implementing a field experiment in which a sample of undergraduate students are randomly assigned to either teams composed by friends or teams composed by individuals not linked by friendship relationships. Students...