We propose a random network model incorporating heterogeneity of agents and a continuous notion of homophily. Unlike … the vast majority of the corresponding economic literature, we capture homophily in terms of similarity rather than … homophily levels. As a possible application we provide a stylized labor market model, where a firm can hire a worker via the …

We propose a random network model incorporating heterogeneity of agents and a continuous notion of homophily. Unlike … the vast majority of the corresponding economic literature, we capture homophily in terms of similarity rather than … characteristics. A homophily parameter directly determines the strength of this effect. As a main result, we show that for any …

a unique value of network homophily maximizing the present value of income. Therefore, there is a gain for risk …

We study the existence of homophily (i.e. the tendency for people to make friends with people who are similar to … existence of homophily with respect to trustworthiness. Trustors ́beliefs about the trustees ́trustfulness are not affected by …

average, children's homophily acts as a complement to the educational effort of highly educated parents but as a substitute … interactions with other low-educated students (i.e., homophily), which reduces the education effort of their parents and, thus …