2006/09/20 by Ostasiewicz, Katarzyna, Tyc, Michal H., Goliczewski, Piotr +3
#FOS: Economics and business #FOS: Physical sciences #General Finance (q-fin.GN) #Physics and Society (physics.soc-ph)
paper · doi:10.48550/arxiv.physics/0609170
We investigate a class of binary choice models with social interactions. We propose a unifying perspective that integrates economic models using a utility function and psychological models using an impact function. A general approach for analyzing the equilibrium structure of these models within mean-field approximation is developed. It is shown that within a mean-field approach both the utility function and the impact function models are equivalent to threshold models. The interplay between heterogeneity and randomness in model formulation is discussed. A general framework is applied in a number of examples leading to some well-known models but also showing the possibility of more complex dynamics related to multiple equilibria. Our synthesis can provide a basis for many practical applications extending the scope of binary choice models.