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| Elias, Carlos G.; Alwang, Jeffrey Roger. |
| This paper presents an economic model of group formation with an application to data collected from an agricultural credit program in western Honduras. We formulate a simple theory of group formation using the concept of centers of gravity to explain why individuals join a group. According to our theory, prospective members join based on the potential benefits and costs of group membership, and based on their perception of social distance between themselves and other group members. Social distance is unobservable by outsiders but known by the individual: if you are in then you know who has blue hair. Thus, we argue that social distance helps explain preferences for group formation. To test our theory we analyze data collected from members and... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Agricultural Finance; Institutional and Behavioral Economics. |
| Ano: 2008 |
URL: http://purl.umn.edu/6527 |
