Working Paper: NBER ID: w25506
Authors: Garance Genicot
Abstract: In this paper, individuals are characterized by their identity — an ideal code of conduct — and by a level of tolerance for behaviors that differ from their own ideal. Individuals first choose their behavior, then form social networks. This paper studies the possibility of compromise, i.e. individuals choosing a behavior different from their ideal point, in order to be accepted by others, to "belong.'' I first show that when tolerance levels are the same in society, compromise is impossible: individuals all choose their preferred behavior and form friendships only with others whose ideal point belong to their tolerance window. In contrast, I show that heterogeneity in tolerance allows for compromise in equilibrium. Moreover, if identity and tolerance are independently distributed, any equilibrium involves some compromise.
Keywords: No keywords provided
JEL Codes: D85; L14; O12; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Homogeneous tolerance levels (L15) | No compromise in equilibrium (D50) |
| Heterogeneity in tolerance (C21) | Compromise possible (D74) |
| More tolerant individual (D11) | Compromise to befriend less tolerant individual (D74) |
| Independently distributed tolerance and identity (D39) | Some level of compromise in equilibrium (D50) |
| Presence of intolerant individuals (J15) | Facilitate compromise among more tolerant individuals (D71) |