Networks and the embedded relationships are critical determinants of how people communicate and form beliefs. The explosion of social media has significantly increased the scope and impact of social learning among consumers. This paper studies observational learning in networks of friends versus...

"Interpersonal relationship (guanxi) is one of the major dynamics of Chinese society. Guanxi has been a pervasive part of the Chinese business world for the last few centuries. It binds literally millions of Chinese firms into a social and business web. In China's new, fast-paced business...

Experimental evidence suggests that human decisions involve a mixture of self-interest and internalized social norms which cannot be accounted for by the Nash equilibrium behavior of Homo Economicus. This led to the notion of strong reciprocity (or altruistic punishment) to capture the human...

A fundamental question in social sciences is how trust emerges. We provide an answer which relies on the formation of social and economic relationships. We argue that behind trust lies the fact that individuals invest in connections taking into account the potential externalities networks...

Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this paper, we investigate how social norms affect individual effort, aggregate effort, and welfare. While individual productivity always positively...

Although the linear-in-means model is the workhorse model in empirical work on peer effects, its theoretical properties are understudied. In this study, we develop a social-norm model that provides a microfoundation of the linear-in-means model and investigate its properties. We show that...