Discrete Choices under Social Influence: Generic Properties

M. B. GORDON; J.-P. NADAL; D. PHAN; V. SEMESHENKO

MATHEMATICAL MODELS AND METHODS IN APPLIED SCIENCES

WORLD SCIENTIFIC PUBL CO PTE LTD

Año: 2009 vol. 19 p. 1441 - 1481

0218-2025

We consider a model of socially interacting individuals that make a binary choice in a context of positive additive endogenous externalities. It encompasses as particular cases several models from the sociology and economics literature. We extend previous results to the case of a general distribution of idiosyncratic preferences, called here Idiosyncratic Willingnesses to Pay (IWP). When j, the ratio of the social influence strength to the standard deviation of the IWP distribution, is small enough, the inverse demand is a classical monotonic (decreasing) function of the adoption rate. However, even if the IWP distribution is mono-modal, there is a critical value of j above which the inverse demand is non monotonic. Thus, depending on the price, there are either one or several equilibria. Beyond this first result, we exhibit the generic properties of the boundaries limiting the regions where the system presents different types of equilibria (unique or multiple). These properties are shown to depend only on qualitative features of the IWP distribution: modality (number of maxima), smoothness and type of support (compact or infinite). The main results are summarized as phase diagrams in the space of the model parameters, on which the regions of multiple equilibria are precisely delimited. We also discuss the links between the model and the random field Ising model studied in the physics literature.