Stability and segregation in group formation

Milchtaich, I. and Winter, E. (2002) Stability and segregation in group formation. Games and Economic Behavior, 38 (2). pp. 318-346. ISSN 0899-8256

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Abstract

This paper presents a model of group formation based on the assumption that individuals prefer to associate with people similar to them. It is shown that, in general, if the number of groups that can be formed is bounded, then a stable partition of the society into groups may not exist. (A partition is defined as stable if none of the individuals would prefer be in a different group than the one he is in.) However, if individuals' characteristics are one-dimensional, then a stable partition always exists. We give sufficient conditions for stable partitions to be segregating (in the sense that, for example, low-characteristic individuals are in one group and high-characteristic ones are in another) and Pareto efficient. In addition, we propose a dynamic model of individual myopic behavior describing the evolution of group formation to an eventual stable, segregating, and Pareto efficient partition. Journal of Economic Literature Classification Numbers: C72, H41. © 2002 Elsevier Science.

Item Type:
Journal Article
Journal or Publication Title:
Games and Economic Behavior
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
126892
Deposited By:
Deposited On:
14 Aug 2018 13:14
Refereed?:
Yes
Published?:
Published
Last Modified:
15 Jan 2020 04:37